Séminaires LEMMA

"Degree centrality, von Neumann-Morgenstern expected utility and externalities in networks"

Agnieszka Rusinowska (CNRS, Université Paris 1) Agnieszka RUSINOWSKA (CNRS, Université Paris 1)
Mardi 26 mars 2024, 11h-12h

Lemma - 4 rue Blaise Desgoffe, 75006 Paris. Salle Maurice Desplas

Abstract : This paper aims to connect the social network literature on centrality measures with the economic literature on von Neumann-Morgenstern expected utility functions using cooperative game theory. The social network literature studies various concepts of network centrality, such as degree, betweenness, connectedness, and so on. This resulted in a great number of network centrality measures, each measuring centrality in a different way. In this paper, we aim to explore which centrality measures can be supported as von Neumann-Morgenstern expected utility functions, reflecting preferences over different network positions in different networks. Besides standard axioms on lotteries and preference relations, we consider neutrality to ordinary risk. We show that this leads to a class of centrality measures that is fully determined by the degrees (i.e. the numbers of neighbours) of the positions in a network. Although this allows for externalities, in the sense that the preferences of a position might depend on the way how other positions are connected, these externalities can be taken into account only by considering the degrees of the network positions. Besides bilateral networks, we extend our result to general cooperative TU-games to give a utility foundation of a class of TU-game solutions containing the Shapley value.

"Does comprehensive compulsory school equalize opportunities? Evidence from the Swedish schooling reform"

Arnaud LEFRANC (CYU)
Mardi 12 mars 2024, 11h-12h

Lemma - 4 rue Blaise Desgoffe, 75006 Paris. Salle Maurice Desplas

Abstract : This paper analyses the long-run distributional effects of the increase of compulsory schooling implemented in Sweden after WWII. To assess the extent of inequality of opportunity, we focus on the distribution of labor market earnings, conditional on father's education. According to equality of opportunity theories, any gap in the distribution of earnings attributable to differences in family background should be interpreted as inequality of opportunity. The reform is said to equalize opportunities if it reduces the gaps in the conditional income distribution, across different levels of parental education. We assess the effect of the reform using estimates of the quantile treatment effects of the reform conditional on family background. Our identification exploits the quasi-experimental implementation of the reform. Our results first indicate significant inequality of opportunity for earnings acquisition among post-WWII Swedish cohorts. Second, while the educational expansion policy had virtually no effect on the average level of earnings of treated individuals, it allowed to significantly equalize opportunities by closing the gap in the opportunity profile of children of low vs. high education parents.