Online social networks in economics

Abstract

This paper describes how economists study social networks. While economists borrow from other fields like sociology or computer science, their approach of modeling of social networks is distinguished by the emphasis on the role of choices under constraints. Economists investigate how socioeconomic background and economic incentives affect the structure and composition of social networks. The characteristics of social networks are important for economic outcomes like the matching of workers to jobs and educational attainment. I review the theoretical and empirical literature that investigates these relationships and discuss possible implications of new, Internet based, forms of social interactions.