A Network Game Model of Community Formation and Risk Sharing

Speaker：Cao Zhigang, School of Economics and Management, Beijing Jiaotong University, Professor

Host：Zeng Yan , Professor, Lingnan College

Time and Date：12:30, Oct. 17, 2023

Venue：Wang Daohan Meeting room, Lingnan hall

Language: Chinese

Abstract：

We investigate informal risk sharing using a dynamic network game model. In each round, a randomly selected agent experiences a negative shock, and the agent's friends decide whether to provide assistance. Assuming that agents have concave utility functions, we prove a version of the Folk Theorem. Our analysis shows that a pair of agents are able to help each other in all relevant rounds of a subgame perfect Nash equilibrium if and only if this connection is a part of a subgraph, in which each agent has a number of friends that is neither too low nor too high. We refer to this type of a subgraph as an inner-core. Connected inner-cores can be understood as communities.  Although optimization problems related to inner-cores are generally NP-hard, we are able to perform several natural comparative statics.(joint work with Guopeng Li and Yiqing Xing)

Profile of the speaker:

Education Background

Bachelor：1999-09-2003-07，Mathematics and Applied Mathematics，Qufu Normal University

Master：2003-09-2006-07，Operations Research and Cybernetics （Operational Research Direction），Qufu Normal University

Ph.D.：2007-09-2010-07，Management Science and Engineering，Academy of Mathematics and Systems Science， Chinese Academy of Sciences

Research Interests

Game Theory and Its Applications，Shared Economy，Computational Economics，Network Economics