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Preface xi PART I: BACKGROUND AND FUNDAMENTALS OF NETWORK ANALYSISChapter 1 Introduction 3 1.1 Why Model Networks? 3 1.2 A Set of Examples4 1.3 Exercises 17 Chapter 2: Representing and Measuring Networks 202.1 Representing Networks 20 2.2 Some Summary Statistics and Characteristicsof Networks 30 2.3 Appendix: Basic Graph Theory 43 2.4 Appendix:Eigenvectors and Eigenvalues 49 2.5 Exercises 51 Chapter 3: EmpiricalBackground on Social and Economic Networks 54 3.1 The Prevalence of SocialNetworks 55 3.2 Observations on the Structure of Networks 56 PART II:MODELS OF NETWORK FORMATION Chapter 4: Random-Graph Models of Networks 774.1 Static Random-Graph Models of Random Networks 78 4.2 Properties ofRandom Networks 86 4.3 An Application: Contagion and Diffusion 105 4.4Distribution of Component Sizes 107 4.5 Appendix: Useful Facts, Tools, andTheorems 110 4.6 Exercises 121 Chapter 5: Growing Random Networks 1245.1 Uniform Randomness: An Exponential Degree Distribution 125 5.2Preferential Attachment 130 5.3 Hybrid Models 134 5.4 Small Worlds,Clustering, and Assortativity 141 5.5 Exercises 150 Chapter 6:Strategic Network Formation 153 6.1 Pairwise Stability 154 6.2 EfficientNetworks 157 6.3 Distance-Based Utility 159 6.4 A Coauthor Model andNegative Externalities 166 6.5 Small Worlds in an Islands-Connections Model170 6.6 A General Tension between Stability and Efficiency 173 6.7Exercises 179 PART III: IMPLICATIONS OF NETWORK STRUCTURE Chapter 7:Diffusion through Networks 185 7.1 Background: The Bass Model 187 7.2Spread of Information and Disease 189 7.3 Search and Navigation on Networks209 7.4 Exercises 221 Chapter 8: Learning and Networks 223 8.1 EarlyTheory and Opinion Leaders 224 8.2 Bayesian and Observational Learning 2258.3 Imitation and Social Influence Models: The DeGroot Model 228 8.4Exercises 253 Chapter 9: Decisions, Behavior, and Games on Networks 2579.1 Decisions and Social Interaction 258 9.2 Graphical Games 269 9.3Semi-Anonymous Graphical Games 273 9.4 Randomly Chosen Neighbors and NetworkGames 279 9.5 Richer Action Spaces 286 9.6 Dynamic Behavior and Contagion293 9.7 Multiple Equilibria and Diffusion in Network Games 297 9.8Computing Equilibria 304 9.9 Appendix: A Primer on Noncooperative GameTheory 308 9.10 Exercises 319 Chapter 10: Networked Markets 327 10.1Social Embeddedness of Markets and Exchange 328 10.2 Networks in LaborMarkets 334 10.3 Models of Networked Markets 353 10.4 Concluding Remarks365 10.5 Exercises 366 PART IV: METHODS, TOOLS, AND EMPIRICAL ANALYSESChapter 11: Game-Theoretic Modeling of Network Formation 371 11.1Defining Stability and Equilibrium 372 11.2 The Existence of Stable Networks377 11.3 Directed Networks 383 11.4 Stochastic Strategic Models of NetworkFormation 388 11.5 Farsighted Network Formation 395 11.6 Transfers andNetwork Formation 399 11.7 Weighted Network Formation 402 11.8 Agent-BasedModeling 406 11.9 Exercises 407 Chapter 12: Allocation Rules, Networks,and Cooperative Games 411 12.1 Cooperative Game Theory 412 12.2Communication Games 416 12.3 Networks and Allocation Rules 419 12.4Allocation Rules When Networks Are Formed 425 12.5 Concluding Remarks 43012.6 Exercises 430 Chapter 13: Observing and Measuring SocialInteraction 434 13.1 Specification and Identification 435 13.2 CommunityStructures, Block Models, and Latent Spaces 443 13.3 Exercises 457Afterword 459 Bibliography 461 Index 491