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Networks in Economics

Möbert, Jochen :
Networks in Economics.
TU Darmstadt
[Ph.D. Thesis], (2008)

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Item Type: Ph.D. Thesis
Title: Networks in Economics
Language: English
Abstract:

The mainly used welfare criterion in the social network literature is Bentham´s utilitarian concept. The shortcomings of this concept are well-known. We compare the outcomes of the utilitarian concept with the Nash social welfare function. By using a Taylor approximation we deduce a formula which allows the direct comparison of both concepts. The implications of welfare considerations of important network formation models are evaluated by using the multiplicative concept. We introduce a new symmetric connection model which is related to Nash´s welfare function in the same way as the original model is related to the utilitarian function. Based on the observation that heavy tail distributions like the power law distribution and the Pareto distribution can be explained by multiplicative structures we propose to use multiplicative utility functions in social network models. Furthermore, multiplicative utility and welfare functions together exhibit favorable characteristics both in normative and positive terms. Many empirically observed social networks have structures which are better modelled by multiplicative functions. From the normative perspective, multiplicative functions might be attractive since the Nash product introduces some form of justice. The literature on ownership structures has made continual use of notions such as cross-holdings and pyramids which are closely related to the vastly increasing network literature. We propose to transfer successfully applied network methods such as network graphs, the MAN-classification scheme, and centrality concepts to the corporate control and corporate governance branch as well. Given these concepts and a unique data set containing 2784 companies we can identify the most powerful German companies and their characteristics. What is an appropriate remuneration level of top managers? Is it justified that DAX-executives earn several million euros each year? Currently, this corporate governance topic is often discussed in Germany. On the one side high executive remuneration can be a result of surpassing company profits. On the other side they might represent the absence of control and the misuse of power. Often circumstantial evidence is available for both lines of arguments. Union representatives hint at the already high remuneration packages and regard them as unjustified. Executives may argue that the increases are a result of the positive economic development of their companies. Additionally, they also point to the large remuneration packages in Anglo-Saxon countries... After decades of empirical deterrence research it is still puzzling whether and under what circumstances Becker’s theory is correct and criminality can be avoided by higher probabilities of detection or severer penalties. In this research article, the puzzle is not solved but the coauthorship network of 623 important researchers and their contributions to the deterrence literature are evaluated in a scientometric analysis. The analysis shows that the findings of each author are positively related to her previous findings, to the findings of authors working in the same field, and to the coauthor network in which each author is embedded.

Alternative Abstract:
Alternative AbstractLanguage
Die vorliegende Dissertation mit dem Titel „Networks in Economics“ hat das Ziel Netzwerke von Menschen und Unternehmen zu analysieren und das Erklärungspotential von Netzwerken zu untersuchen. Das traditionelle Modellgerüst von Ökonomen lässt Personen auf anonymen Märkten agieren. Die Netzwerkanalyse erweitert das Methodenset der Ökonomen, indem nicht nur die Entscheidungen der Individuen und ihre Eigenschaften zueinander in Beziehung gesetzt werden, sondern auch das Beziehungsgeflecht aller Individuen als wichtiger Bestandteile einer Analyse berücksichtigt wird.German
Uncontrolled Keywords: Networks, Social, Deutschland AG, Executive Remuneration, Gary S. Becker, Deterrence
Alternative keywords:
Alternative keywordsLanguage
Networks, Social, Deutschland AG, Executive Remuneration, Gary S. Becker, DeterrenceEnglish
Classification DDC: 300 Sozialwissenschaften > 310 Statistik
300 Sozialwissenschaften > 330 Wirtschaft
600 Technik, Medizin, angewandte Wissenschaften > 650 Management
Divisions: Fachbereich Rechts- und Wirtschaftswissenschaften
Date Deposited: 17 Oct 2008 09:23
Last Modified: 07 Dec 2012 11:54
URN: urn:nbn:de:tuda-tuprints-10524
License: Creative Commons: Attribution-Noncommercial-No Derivative Works 3.0
Referees: Entorf, Prof. Dr. Horst and Helm, Prof. Dr. Carsten
Refereed: 17 June 2008
URI: http://tuprints.ulb.tu-darmstadt.de/id/eprint/1052
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