Social Networks And Mutual Assistance In The Digital Economy Era

Individual mutual assistance is an important way to deal with risks.With the help of financial technology and social networks,contacts and capital exchanges between individuals have become more convenient and frequent in the digital economy era,which gives new opportunities for favor exchanges between individuals and brings new challenges.Our studies about risk sharing on networks belongs to the field of digital governance,the studies of which will give implications for the development of digital economy.Risk sharing through network is an important way to deal with risks.Social networks in the digital economy era is an upgraded version of the traditional social network.The core features are the increase in scale,the existence of information forwarding and information asymmetry.Based on these characteristics,this paper studies the relationship between an individual’s position in the social network and his risk sharing behavior by constructing a simple network game model.We find that,contrast to the insurance market,informal risk sharing is not consistent with the intuition that“the more,the better”under the assumption that people can’t change the extent to which people help each other in the short term.The best number of friends with which an agent like to share risk depends on the risk shock.When the risk shock is large enough,individuals with high social capital are willing to cooperate and share the risk with each other.We can use the-core,a widely used index in networks,to characterize the equilibrium structure.When the risk shock is moderate,an agent wants to cooperate to share risk when enough but not too many its friends want to this,and hence the risk is shared among individuals with moderate social capital.We propose a new index,called（₁,₂）-core,to characterize it.When the risk shock is very weak,social capital does not work as each player will choose to undertake the risk itself whatever others do.After analyzing the equilibrium structure,we conducts a comparatively static analysis with respect to changing network structure.We give the condition that adding a link to the initial network can deterministically induce a Pareto optimal.Then,we study the effect of information forwarding on the equilibrium structure and individuals’welfare.We find that information forwarding is beneficial to all individuals only when the risk impact is large enough.Finally,we analyze how the results of our basic model can be extended to information asymmetry situations where there exists information asymmetry caused by the network structure,and what changes will happen to the individual risk allocation model.Our result is that due to asymmetric information,risk sharing cooperation among individuals is more difficult to maintain.However,information forwarding can still increase risk sharing level under the big risk shock even if asymmetric information exists.The results of this paper imply that social networks reduce the cost of favor exchanges but also increase burdens.Good digital governance needs to be classified according to the size of the risk shock.Our model provides some theoretical insights for understanding individual mutual assistance in the digital economy era.The policy recommendation is that the government should encourage mutual assistance for scenarios where the risk shock is large enough,such as the medical crowdfunding.On the other hand,some customs including giving a large amount of money as a wedding gift should be regulated.Finally,the government should pay attention to the help-seeking needs of marginalized groups and take more measures to help them.