This is an archived course. A more recent version may be available at ocw.mit.edu.

Syllabus

Course Meeting Times

Lectures: 2 sessions / week, 1.5 hours / session

Recitations: 1 session / week, 1 hour / session

Description

Networks are ubiquitous in our modern society. The World Wide Web that links us to and enables information flows with the rest of the world is the most visible example. It is, however, only one of many networks within which we are situated. Our social life is organized around networks of friends and colleagues. These networks determine our information, influence our opinions, and shape our political attitudes. They also link us, often through important but weak ties, to everybody else in the United States and in the world. Economic and financial markets also look much more like networks than anonymous marketplaces. Firms interact with the same suppliers and customers and use Web-like supply chains. Financial linkages, both among banks and between consumers, companies and banks, also form a network over which funds flow and risks are shared. Systemic risk in financial markets often results from the counterparty risks created within this financial network. Food chains, interacting biological systems and the spread and containment of epidemics are some of the other natural and social phenomena that exhibit a marked networked structure.

This course will introduce the tools for the study of networks. It will show how certain common principles permeate the functioning of these diverse networks and how the same issues related to robustness, fragility and interlinkages arise in several different types of networks.

Prerequisites

The prerequisites for this course are basic probability at the level of 6.041 Probabilistic Systems Analysis and 14.30 Introduction to Statistical Method in Economics. Since the course is aiming at developing a systematic understanding and analysis of networks and processes over networks, the students will be expected to work with mathematical models and analytical reasoning.

Textbooks

The lecture slides we will provide contain all of the information and material you need for the course.

In addition, two textbooks are useful supplements, and you will benefit from studying one or both of those, particularly to obtain additional details or different derivations and discussions. The first is David Easley's and Jon Kleinberg's forthcoming book Networks, Crowds, and Markets: Reasoning about a Highly Connected World, which covers most of the topics at a level somewhat lower than this class.

Buy at Amazon Easley, David, and Jon Kleinberg. Networks, Crowds, and Markets: Reasoning about a Highly Connected World. New York, NY: Cambridge University Press, 2010. ISBN: 9780521195331.

At a level that is slightly more advanced than our course is Matthew Jackon's Social and Economic Networks, which is a useful reference both for substantive and technical material.

Buy at Amazon Jackson, Matthew O. Social and Economic Networks. Princeton, NJ: Princeton University Press, 2008. ISBN: 9780691134406.

The analysis of economic and social networks relies heavily on game theory. Of course, the course does not presume any game theoretic background, though some students will have taken 14.12 Economic Applications of Game Theory or may be concurrently registered with this course. We will cover all of the game theory that you need as we go along. Two books that are excellent references are:

Buy at Amazon Osborne, Martin J. Introduction to Game Theory. New York, NY: Oxford University Press, 2003. ISBN: 9780195128956.

Buy at Amazon Gibbons, Robert. Game Theory for Applied Economists. Princeton, NJ: Princeton University Press, 1992. ISBN: 9780691003955.

For additional texts and references, see readings.

Course Requirements

Problem Sets

There will be bi-weekly problem sets. There will also be some computational assignments (MATLAB®). Homework solutions will be handed out on the day that the homework is due. Late homework assignments will be heavily discounted.

You may interact with fellow students when preparing homework solutions. At the end, however, you must write up solutions on your own. Duplicating a solution that someone else has written or providing solutions to be copied is not acceptable. If you do collaborate on homework, you must cite your collaborators in your written solution.

Final Projects

The final project will be on a topic of your choice that overlaps with the course. You will be expected to work in groups of 2 or 3 people. The project will be due at the end of the exam week. See projects for more details on project format and possible topics.

Grading

ACTIVITIES PERCENTAGES
Problem sets 20%
Midterm exam 40%
Final project 40%