Social Networks

Network theory is developing rapidly across a range of disciplines including physics, computer science, sociology and economics. Network structures, such as small worlds and scale-free graphs, allow formalisation of the limited knowledge to which people and firms have access, moving away from the assumption that everybody is connected to everybody else and the availability of perfect information.

 

Consideration of the topology of connections between agents is a key modelling decision when specifying ABMs, and the network theory that underpins this choice is developing rapidly across a range of disciplines including physics, computer science, sociology and economics. Network structures, such as small worlds and scale-free graphs, allow formalisation of the limited knowledge to which people and firms have access, moving away from the assumption that everybody is connected to everybody else and the availability of perfect information.

 

It is well established in the literature that small world networks, in particular, are prolific, and that differences in network structure can have a significant impact on the speed at which information percolates through a system as well as its robustness to external shocks. It has also been estimated that over two thirds of purchasing decisions in consumer goods markets are influenced by social interactions. Combining network theory with agent-based modelling provides a rich analytical framework for understanding these dynamics.

 

Volterra specialises in this modelling approach, drawing on our statistical and modelling expertise and economic knowledge. Learn more about how we have applied these techniques to help make sense of real world problems for our clients in understanding new product penetration, market trading dynamics and the spread of new ideas and behaviours, or for further information email Paul Ormerod.