Discussion Papers

Aug 2016

DP 62

This paper has two main objectives: first, to provide a formal definition of endogenous systemic risk that is firmly grounded in equilibrium dynamics of temporary financial networks (i.e., short-term lending and investment networks); and...

Discussion Papers

Feb 2016

DP 56

We construct a model of a principal-agent game of network formation (over layered networks) with asymmetric information and we consider the following two questions: (1) Is it possible for the principal to design a mechanism that links the reports of...

Discussion Papers

Feb 2016

DP 55

We answer the following question: Does regulating the banking network increase systemic risk in the entire financial network in the presence of unregulated shadow banks? In order to answer this question, we introduce a formal definition of systemic...

Discussion Papers

Jun 2015

DP 39

We model the structure and strategy of social interactions prevailing at any point in time as a directed network and we address the following open question in the theory of social and economic network formation: given the rules of network and...