Targeting Interventions in Networks

Andrea Galeotti, Benjamin Golub, Sanjeev Goyal*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

We study games in which a network mediates strategic spillovers and externalities among the players. How does a planner optimally target interventions that change individuals' private returns to investment? We analyze this question by decomposing any intervention into orthogonal principal components, which are determined by the network and are ordered according to their associated eigenvalues. There is a close connection between the nature of spillovers and the representation of various principal components in the optimal intervention. In games of strategic complements (substitutes), interventions place more weight on the top (bottom) principal components, which reflect more global (local) network structure. For large budgets, optimal interventions are simple—they essentially involve only a single principal component.

Original languageEnglish (US)
Pages (from-to)2445-2471
Number of pages27
JournalEconometrica
Volume88
Issue number6
DOIs
StatePublished - Nov 2020
Externally publishedYes

Keywords

  • Targeting
  • externalities
  • interventions
  • network games
  • networks
  • peer effects
  • strategic interaction

ASJC Scopus subject areas

  • Economics and Econometrics

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