Effect of network topology and node centrality on trading

Abstract Global supply networks in agriculture, manufacturing, and services are a defining feature of the modern world. The efficiency and the distribution of surpluses across different parts of these networks depend on the choices of intermediaries. This paper conducts price formation experiments w...

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Autores principales:	Felipe Maciel Cardoso, Carlos Gracia-Lázaro, Frederic Moisan, Sanjeev Goyal, Ángel Sánchez, Yamir Moreno
Formato:	article
Lenguaje:	EN
Publicado:	Nature Portfolio 2020
Materias:	Medicine R Science Q
Acceso en línea:	https://doaj.org/article/6252195cb27648da9841b096a4ef44b7
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spelling	oai:doaj.org-article:6252195cb27648da9841b096a4ef44b72021-12-02T16:24:49ZEffect of network topology and node centrality on trading10.1038/s41598-020-68094-z2045-2322https://doaj.org/article/6252195cb27648da9841b096a4ef44b72020-07-01T00:00:00Zhttps://doi.org/10.1038/s41598-020-68094-zhttps://doaj.org/toc/2045-2322Abstract Global supply networks in agriculture, manufacturing, and services are a defining feature of the modern world. The efficiency and the distribution of surpluses across different parts of these networks depend on the choices of intermediaries. This paper conducts price formation experiments with human subjects located in large complex networks to develop a better understanding of the principles governing behavior. Our first experimental finding is that prices are larger and that trade is significantly less efficient in small-world networks as compared to random networks. Our second experimental finding is that location within a network is not an important determinant of pricing. An examination of the price dynamics suggests that traders on cheapest—and hence active—paths raise prices while those off these paths lower them. We construct an agent-based model (ABM) that embodies this rule of thumb. Simulations of this ABM yield macroscopic patterns consistent with the experimental findings. Finally, we extrapolate the ABM on to significantly larger random and small-world networks and find that network topology remains a key determinant of pricing and efficiency.Felipe Maciel CardosoCarlos Gracia-LázaroFrederic MoisanSanjeev GoyalÁngel SánchezYamir MorenoNature PortfolioarticleMedicineRScienceQENScientific Reports, Vol 10, Iss 1, Pp 1-9 (2020)
institution	DOAJ
collection	DOAJ
language	EN
topic	Medicine R Science Q
spellingShingle	Medicine R Science Q Felipe Maciel Cardoso Carlos Gracia-Lázaro Frederic Moisan Sanjeev Goyal Ángel Sánchez Yamir Moreno Effect of network topology and node centrality on trading
description	Abstract Global supply networks in agriculture, manufacturing, and services are a defining feature of the modern world. The efficiency and the distribution of surpluses across different parts of these networks depend on the choices of intermediaries. This paper conducts price formation experiments with human subjects located in large complex networks to develop a better understanding of the principles governing behavior. Our first experimental finding is that prices are larger and that trade is significantly less efficient in small-world networks as compared to random networks. Our second experimental finding is that location within a network is not an important determinant of pricing. An examination of the price dynamics suggests that traders on cheapest—and hence active—paths raise prices while those off these paths lower them. We construct an agent-based model (ABM) that embodies this rule of thumb. Simulations of this ABM yield macroscopic patterns consistent with the experimental findings. Finally, we extrapolate the ABM on to significantly larger random and small-world networks and find that network topology remains a key determinant of pricing and efficiency.
format	article
author	Felipe Maciel Cardoso Carlos Gracia-Lázaro Frederic Moisan Sanjeev Goyal Ángel Sánchez Yamir Moreno
author_facet	Felipe Maciel Cardoso Carlos Gracia-Lázaro Frederic Moisan Sanjeev Goyal Ángel Sánchez Yamir Moreno
author_sort	Felipe Maciel Cardoso
title	Effect of network topology and node centrality on trading
title_short	Effect of network topology and node centrality on trading
title_full	Effect of network topology and node centrality on trading
title_fullStr	Effect of network topology and node centrality on trading
title_full_unstemmed	Effect of network topology and node centrality on trading
title_sort	effect of network topology and node centrality on trading
publisher	Nature Portfolio
publishDate	2020
url	https://doaj.org/article/6252195cb27648da9841b096a4ef44b7
work_keys_str_mv	AT felipemacielcardoso effectofnetworktopologyandnodecentralityontrading AT carlosgracialazaro effectofnetworktopologyandnodecentralityontrading AT fredericmoisan effectofnetworktopologyandnodecentralityontrading AT sanjeevgoyal effectofnetworktopologyandnodecentralityontrading AT angelsanchez effectofnetworktopologyandnodecentralityontrading AT yamirmoreno effectofnetworktopologyandnodecentralityontrading
_version_	1718384113563467776

Effect of network topology and node centrality on trading

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