APPLYING NEXT GENERATION TOOLS, DATA, AND ECONOMIC COMPLEXITY IDEAS

Talk by Andrea Gabrielli at Conference "FISMAT 2015"

29-09-2015
Location: 
Palermo (Italy)

Title: "Estimating topological properties of weighted networks from limited information: applications to socio-economic field"

 

Abstract

 

A problem typically encountered when studying complex systems is the limitedness of the information available on their topology, which hinders our understanding of their structure and of the dynamical processes taking place on them. A paramount example is provided by financial networks, whose data are privacy-protected: banks publicly disclose only their aggregate exposure towards other banks, keeping individual exposures towards each single bank secret. Yet, the estimation of systemic risk strongly depends on the detailed structure of the interbank network. The resulting challenge is that of using aggregate information to statistically reconstruct a network and correctly predict its higher-order properties. Standard approaches either generate unrealistically dense networks, or fail to reproduce the observed topology by assigning homogeneous link weights. Here we develop an improved reconstruction method based on statistical mechanics concepts, that makes use of the empirical link density in a highly nontrivial way. Technically, the novelty of our approach lies in the preliminary  stimation of node degrees from empirical node strengths and link density, followed by a maximum-entropy inference based on the combination of empirical strengths and estimated degrees. Our method is successfully tested on the international trade network and the interbank money market, and represents a valuable tool for gaining insights on privacy-protected or partially-accessible systems.