Daniel A. Hojman

Endogenous networks, social games, and evolution

Abstract This paper studies a social game where agents choose their partners as well as their actions. Players interact with direct and indirect neighbors in the endogenous network. We show that the architecture of any nontrivial Nash equilibrium is minimally connected, and equilibrium actions approximate a symmetric equilibrium of the underlying game. We apply the model to analyze stochastic stability in 2 × 2 coordination games. We find that long-run equilibrium selection depends on a trade-off between efficiency and risk dominance due to the presence of scale effects arising from network externalities. Our results suggest a general pattern of equilibrium selection.

Core and Periphery in Endogenous Networks

Many economic and social networks share two common organizing features: (1) a core-periphery structure; (2) positive correlation between network centrality and payoffs. In this paper, we build a model of network formation where these features emerge endogenously. In our model, the unique equilibrium network architecture is a periphery-sponsored star. In this equilibrium, one player, the center, maintains no links and achieves a high payoff, while all other players maintain a single link to the center and achieve lower payoffs. With heterogeneous groups, equilibrium networks are interconnected stars. We show that small minorities tend to integrate while large minorities are self-sufficient. Although any player can be the center in a static equilibrium, evolution selects the agent with most valuable resources as the center in the long run. In particular, even small inequalities in resources can lead to large payoff inequality because of the endogenous social structure. Our main results are robust to the introduction of transfers and bargaining over link costs.

On the Measurement of Poverty Dynamics

This paper introduces a family of multi-period poverty measures derived from commonly used static poverty measures. Our measures trade-off poverty levels and changes (gains and losses) over time, and are consistent with loss aversion. We characterize the partial ranking over income dynamics induced by these measures and use it in two empirical applications with longitudinal household level data. Comparing two decades of income dynamics in the United States, we find that the income dynamics of the 1990s-post Welfare reform dominates the income dynamics of the 1980s-pre Welfare reform. Next, we compare the contemporary income dynamics of three industrialized countries and conclude that United Kingdom dominates Germany and United States, and Germany dominates the United States if poverty stocks are given more importance than poverty flows. The differences between our ranking and those obtained using other welfare criteria such as social mobility suggest that our measures capture critical in formation about the evolution of poverty.

The cost of dementia in an unequal country: The case of Chile

We study the economic cost of dementia in Chile, and its variation according to socioeconomic status (SES). We use primary data from a survey of 330 informal primary caregivers who completed both a RUD-Lite and a socio-demographic questionnaire to evaluate the severity of dementia and caregiver’s burden. The costs of dementia are broken into three components: direct medical costs (medical care, drugs, tests); direct social costs (social service, daycare); and indirect costs (mostly associated to informal care). The average monthly cost per patient is estimated at US

Core and periphery in networks

1,463. Direct medical costs account for 20 per cent, direct social costs for 5 per cent and indirect costs for 75 per cent of the total cost. The mean monthly cost is found to be inversely related to SES, a pattern largely driven by indirect costs. The monthly cost for high SES is US

Choice, Rationality and Welfare Measurement

1,083 and US

Media and polarization: Evidence from the introduction of broadcast TV in the United States☆

1,588 for low SES. A multivariate regression analysis suggests that severity of dementia and caregiver’s burden account for between 49 and 70 per cent of the difference in the indirect cost across SES. However, between one-third and one-half of the variation across SES is not due to gradient in severity of dementia. Direct medical costs increase in higher SES, reflecting differences in purchasing power, while indirect costs are inversely related to SES and more than compensate differences in medical costs. Moreover, in lower SES groups, female caregivers, typically family members who are inactive in the labor market, mostly provide informal care. The average annual cost of dementia in Chile (US

Media and Polarization

17,559) is lower in comparison to high-income countries (US

Over Indebtedness and Depression: Sad Debt or Sad Debtors?

39,595) and the proportion of cost related to informal cost is higher (74 per cent compared to 40 per cent). SES is a key determinant in the cost of dementia. In the absence of universal access to treatment, part of the social cost of dementia potentially preserves or increases income and gender inequality.