Bootstrapping topology and systemic risk of complex network using the fitness model

The choice of free parameters in network models is subjective, since it depends on what topological properties are being monitored. However, we show that the Maximum Likelihood (ML) principle indicates a unique, statistically rigorous parameter choice, associated to a well defined topological feature. We then find that, if the ML condition is incompatible with the built-in parameter choice, network models turn out to be intrinsically ill-defined or biased. To overcome this pr...

Power-law networks such as the Internet, terrorist cells, species relationships, and cellular metabolic interactions are susceptible to node failures, yet maintaining network connectivity is essential for network functionality. Disconnection of the network leads to fragmentation and, in some cases, collapse of the underlying system. However, the influences of the topology of networks on their ability to withstand node failures are poorly understood. Based on a study of the re...

In the paper, we present an incremental approach in the construction of scale free networks with hidden variables. The work arises from the necessity to generate that type of networks with a given number of links instead of obtaining a random configurations for a given set of parameters as in the usual literature. I propose an analytical approach of network evolution models gathering information along time based on the construction of a stochastic process on the space of poss...

We study a recent model of random networks based on the presence of an intrinsic character of the vertices called fitness. The vertices fitnesses are drawn from a given probability distribution density. The edges between pair of vertices are drawn according to a linking probability function depending on the fitnesses of the two vertices involved. We study here different choices for the probability distribution densities and the linking functions. We find that, irrespective of...

The field of Financial Networks is a paramount example of the novel applications of Statistical Physics that have made possible by the present data revolution. As the total value of the global financial market has vastly outgrown the value of the real economy, financial institutions on this planet have created a web of interactions whose size and topology calls for a quantitative analysis by means of Complex Networks. Financial Networks are not only a playground for the use o...

Functional complex networks have meant a pivotal change in the way we understand complex systems, being the most outstanding one the human brain. These networks have classically been reconstructed using a frequentist approach that, while simple, completely disregards the uncertainty that derives from data finiteness. We here provide an alternative solution based on Bayesian inference, with link weights treated as random variables described by probability distributions, from w...

Initially designed to predict and explain the economic trajectories of countries, cities, and regions, economic complexity has been found applicable in diverse contexts such as ecology and chess openings. The success of economic complexity stems from its capacity to assess hidden capabilities within a system indirectly. The existing algorithms for economic complexity operate only when the underlying interaction topology conforms to a bipartite graph. A single link disrupting ...

Complex networks datasets often come with the problem of missing information: interactions data that have not been measured or discovered, may be affected by errors, or are simply hidden because of privacy issues. This Element provides an overview of the ideas, methods and techniques to deal with this problem and that together define the field of network reconstruction. Given the extent of the subject, we shall focus on the inference methods rooted in statistical physics and ...

Reconstructing patterns of interconnections from partial information is one of the most important issues in the statistical physics of complex networks. A paramount example is provided by financial networks. In fact, the spreading and amplification of financial distress in capital markets is strongly affected by the interconnections among financial institutions. Yet, while the aggregate balance sheets of institutions are publicly disclosed, information on single positions is ...

We present an empirical analysis of the network formed by the trade relationships between all world countries, or World Trade Web (WTW). Each (directed) link is weighted by the amount of wealth flowing between two countries, and each country is characterized by the value of its Gross Domestic Product (GDP). By analysing a set of year-by-year data covering the time interval 1950-2000, we show that the dynamics of all GDP values and the evolution of the WTW (trade flow and topo...