: We examine the dynamic formation and stochastic evolution of networks connecting individuals. The payoff to an individual from an economic or social activity depends on the network of connections among individuals. Over time individuals form and sever links connecting themselves to other individuals based on the improvement that the resulting network offers them relative to the current network. We call such sequences of networks, improving paths,' and show that such sequences can include cycles and study conditions on underlying allocation rules that characterize cycles. Building on the concept of improving paths, we consider a stochastic evolutionary process where in addition to intended changes in the network there is a small probability of unintended changes or errors. Predictions can be made regarding the relative likelihood that the stochastic process will lead to any given network at some time, and the evolutionary process selects from among the statically stable networks and c...

This paper provides an analysis of aggregate behavioral outcomes when individual utility exhibits social interaction effects. We study generalized logistic models of individual choice which incorporate terms reflecting the desire of individuals to conform to the behavior of others in an environment of noncooperative decisionmaking. Laws of large numbers are generated in such environments. Multiplicity of

This article argues that the agent-based computational model permits a distinctive approach to social science for which the term “generative ” is suitable. In defending this terminology, features distinguishing the approach from both “inductive ” and “deductive ” science are given. Then, the following specific contributions to social science are discussed: The agent-based computational model is a new tool for empirical research. It offers a natural environment for the study of connectionist phenomena in social science. Agent-based modeling provides a powerful way to address certain enduring—and especially interdisciplinary—questions. It allows one to subject certain core theories—such as neoclassical microeconomics—to important types of stress (e.g., the effect of evolving preferences). It permits one to study how rules of individual behavior give rise—or “map up”—to macroscopic regularities and organizations. In turn, one can employ laboratory behavioral research findings to select among competing agent-based (“bottom up”) models. The agent-based approach may well have the important effect of decoupling individual rationality from macroscopic equilibrium and of separating decision science from social science more generally. Agent-based modeling offers powerful new forms of hybrid theoretical-computational work; these are particularly relevant to the study of non-equilibrium systems. The agentbased approach invites the interpretation of society as a distributed computational device, and in turn the interpretation of social dynamics as a type of computation. This interpretation raises important foundational issues in social science—some related to intractability, and some to undecidability proper. Finally, since “emergence” figures prominently in this literature, I take up the connection between agent-based modeling and classical emergentism, criticizing the latter and arguing that the two are incompatible. � 1999 John Wiley &

Spatial econometric methods deal with the incorporation of spatial interaction and spatial structure into regression analysis. The field has seen a recent and rapid growth spurred both by theoretical concerns as well as by the need to be able to apply econometric models to emerging large geocoded data bases. The review presented in this chapter outlines the basic terminology and discusses in some detail the specification of spatial effects, estimation of spatial regression models, and specification tests for spatial effects.

several years has seen a revival. Unfortunately, little progress has been made on empirical estimation of such interactions and testing for their presence, on the development of policy interventions which work through social interactions, or on the evaluation of such interventions because several basic identification and estimation problems have not been seriously confronted.

This paper studies the formation of networks among individuals. The focus is on the compatibility of overall societal welfare with individual incentives to form and sever links. The paper reviews and synthesizes some previous results on the subject, and also provides new results on the existence of pairwise-stable networks and the relationship between pairwise stable and efficient networks in a variety of contexts and under several definitions of efficiency.

This paper reviews a number of conceptual issues pertaining to the implementation of an explicit “spatial ” perspective in applied econometrics. It provides an overview of the motivation for including spatial effects in regression models, both from a theory-driven as well as from a data-driven perspective. Considerable attention is paid to the inferential framework necessary to carry out estimation and testing and the different assumptions, constraints and implications embedded in the various specifications available in the literature. The review combines insights from the traditional spatial econometrics literature as well as from geostatistics, biostatistics and medical image analysis.

This article outlines the motivation for a spatial approach as a novel focus for cross-disciplinary interaction and research in the social and behavioral sciences. The authors review the emerging interest in space and place in the recent social science literature and develop a vision for a spatially integrated social science. This vision provides the conceptual basis for a program of six activities designed to promote a spatial perspective: learning resources, workshops, bestpractice examples, place-based search, software tools, and a virtual community. The six programs will be informed by advances in the methods, technologies, and principles underlying spatial information science. The analysis of space and place has become an increasingly pivotal component of social science research in the past two decades. In part, this can be attributed to the transformation of social space around the globe, accompanied by shifts of varying degrees of magnitude in social science conceptualizing and theorizing. One aspect of these changes is subsumed under the general notion of “space-time compres-This article is a revised and shortened version of a proposal to the U.S. National Science Foundation (NSF) titled “SPESS: A Center for Spatially Enabled Social Science, ” which resulted in a five-year

Abstract. The theme of this article is the importance – and the many causes – of lowlevel equilibrium “traps. ” Rosenstein-Rodan pointed out that spillovers may cause the return to an activity to increase with the number of others who undertake that activity. If spillovers are strong enough, both low- and high-level equilibria are possible, with no tendency of market forces to lead from the worse to the better state of affairs. This article shows how modern economic theory broadened our view of the sources of spillovers that could lead to "traps " with low innovation and inefficient institutions. Evidence from China is consistent with local underdevelopment traps. The article argues for an “ecological ” perspective on development, where the influences from others in one’s environment are a critical determinant of outcomes. This perspective provides the basis for the distinction between "deep " interventions, which change underlying forces, and "shallow " interventions, which do not. Karla Hoff is a research economist at the World Bank. This article draws on Hoff and Stiglitz (forthcoming). The author would like to thank Irma Adelman for helpful comments, and Abhijit Banerjee, Arnold Harberger, Gustav Ranis, Debraj Ray, and Joseph Stiglitz for discussions of the issues raised in this article. OUTLINE 1. The place of coordination failures in modern economic theory Neoclassical theory and the Coase theorem Institutional economics outside the 'straitjacket ' of neoclassical economics Path dependence A radically broadened view of externalities and public goods "Ecological economics" 2. Examples of underdevelopment traps A low R&D trap Self-sustaining institutions Big Push theories of industrialization 3. An econometric test: Local poverty traps in rural China 4. Perspectives on policy 5. Conclusion Coordinating good equilibria

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