Targeting Interventions in Networks

Andrea Galeotti, Benjamin Golub and Sanjeev Goyal

Econometrica, 2020, vol. 88, issue 6, 2445-2471

Abstract: We study games in which a network mediates strategic spillovers and externalities among the players. How does a planner optimally target interventions that change individuals' private returns to investment? We analyze this question by decomposing any intervention into orthogonal principal components, which are determined by the network and are ordered according to their associated eigenvalues. There is a close connection between the nature of spillovers and the representation of various principal components in the optimal intervention. In games of strategic complements (substitutes), interventions place more weight on the top (bottom) principal components, which reflect more global (local) network structure. For large budgets, optimal interventions are simple—they essentially involve only a single principal component.

Date: 2020
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Citations: View citations in EconPapers (55)

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https://doi.org/10.3982/ECTA16173

Related works:
Working Paper: Targetting interventions in networks (2018)
Working Paper: Targeting interventions in networks (2018)
Working Paper: Targeting Interventions in Networks (2017)
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