Uniqueness of Equilibria in Interactive Networks

Abstract

This paper extends the unified network model, proposed by Acemoglu et al. (2016b), such that interaction functions can be heterogeneous, and the sensitivity matrix has less than or equal to one spectral radius. We show the existence and (almost surely) uniqueness of equilibrium under both eventually contracting and noncontracting assumptions. Applying the equilibrium in the study of systemic risk, we provide a measure to determine the key player who causes the most significant impact if removed from the network.

Tasks

Reproductions