Sanjeev Goyal is a pioneer and leading international scholar in the study of social and economic networks. His book, Connections: an Introduction to the Economics of Networks, was published in 2007 by Princeton University Press. A Chinese translation appeared in 2010.
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The interaction between social structure and markets remains a central theme in the social sciences. In some instances, markets can build on and enhance social networks’ economic role; in other contexts, markets appear to be in direct competition with social networks. The impact of markets on inequality and welfare is also varying: while markets can sometimes offer valuable outside options to marginalised individuals, in other situations only well connected and better off individuals can benefit from them.
Individuals derive benefits from their connections, but these may, at the same time, transmit external threats. Individuals therefore invest in security to protect themselves. However, the incentives to invest in security depend on their network exposures. We study the problem of designing a network that provides the right individual incentives.
It is instructive to view the study of networks in economics as a shift in paradigm, in the sense of Kuhn (1962). This perspective helps us locate the innovation that networks bring to economics, appreciate different strands of the research, assess the current state of the subject and identify the challenges.
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Prof. Sanjeev Goyal explains his general theory of network formation based on individual incentives, and their economic implications