Behavioral Communities and the Atomic Structure of Networks

We develop a theory of ‘behavioral communities’ and the ‘atomic structure’ of networks. We define atoms to be groups of agents whose behaviors always match each other in a set of coordination games played on the network. This provides a microfoundation for a method of detecting communities in social and economic networks. We provide theoretical results characterizing such behavior-based communities and atomic structures and discussing their properties in large random networks. We also provide an algorithm for identifying behavioral communities. We discuss applications including: a method of estimating underlying preferences by observing behavioral conventions in data, and optimally seeding diffusion processes when there are peer interactions and homophily. We illustrate the techniques with applications to high school friendship networks and rural village networks. JEL Classification Codes: D85, D13, L14, O12, Z13