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Conversations among Competitors

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  • Jeremy C. Stein

Abstract

I develop a model of bilateral conversations in which players honestly exchange ideas with their competitors. The key to incentive compatibility is complementarity in the information structure: a player can generate a new insight only if he has access to his counterpart’s previous thoughts on a topic. I then examine a social network in which A has a conversation with B, then B has a conversation with C, and so on. Relatively underdeveloped ideas can travel long distances over the network. More valuable ideas, by contrast, tend to remain localized among small groups of agents. (JEL D83)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.98.5.2150
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 98 (2008)
Issue (Month): 5 (December)
Pages: 2150-62

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Handle: RePEc:aea:aecrev:v:98:y:2008:i:5:p:2150-62

Note: DOI: 10.1257/aer.98.5.2150
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References

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  1. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  2. Mathias Dewatripont & Jean Tirole, 2005. "Modes of Communication," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1217-1238, December.
  3. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," Working papers 527, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Lauren Cohen & Andrea Frazzini & Christopher Malloy, 2007. "The Small World of Investing: Board Connections and Mutual Fund Returns," NBER Working Papers 13121, National Bureau of Economic Research, Inc.
  5. Krishna, Vijay & Morgan, John, 2004. "The art of conversation: eliciting information from experts through multi-stage communication," Journal of Economic Theory, Elsevier, vol. 117(2), pages 147-179, August.
  6. Paolo Colla & Antonio Mele, 2008. "Information linkages and correlated trading," LSE Research Online Documents on Economics 24439, London School of Economics and Political Science, LSE Library.
  7. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  8. Fudenberg, Drew & Ellison, Glenn, 1995. "Word-of-Mouth Communication and Social Learning," Scholarly Articles 3196300, Harvard University Department of Economics.
  9. Harrison Hong & Jeffrey D. Kubik & Jeremy C. Stein, 2003. "The Neighbor's Portfolio: Word-of-Mouth Effects in the Holdings and Trade of Money Managers," NBER Working Papers 9711, National Bureau of Economic Research, Inc.
  10. Hellmann, Thomas F & Perotti, Enrico C, 2006. "The Circulation of Ideas: Firms Versus Markets," CEPR Discussion Papers 5469, C.E.P.R. Discussion Papers.
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Cited by:
  1. Bernhard Ganglmair & Emanuele Tarantino, 2012. "Patent Disclosure in Standard Setting," NBER Working Papers 17999, National Bureau of Economic Research, Inc.
  2. Gupta-Mukherjee, Swasti, 2013. "When active fund managers deviate from their peers: Implications for fund performance," Journal of Banking & Finance, Elsevier, vol. 37(4), pages 1286-1305.
  3. Manela, Asaf, 2014. "The value of diffusing information," Journal of Financial Economics, Elsevier, vol. 111(1), pages 181-199.
  4. Haeussler, Carolin & Jiang, Lin & Thursby, Jerry & Thursby, Marie, 2014. "Specific and general information sharing among competing academic researchers," Research Policy, Elsevier, vol. 43(3), pages 465-475.
  5. Paolo Colla & Antonio Mele, 2010. "Information Linkages and Correlated Trading," Review of Financial Studies, Society for Financial Studies, vol. 23(1), pages 203-246, January.
  6. Wioletta Dziuda & Ronen Gradwohl, 2013. "Achieving Cooperation under Privacy Concerns," Discussion Papers 1572, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Carolin Haeussler & Lin Jiang & Jerry Thursby & Marie C. Thursby, 2009. "Specific and General Information Sharing Among Academic Scientists," NBER Working Papers 15315, National Bureau of Economic Research, Inc.
  8. Thomas Hellman & Enrico Perotti, 2010. "The Circulation of Ideas in Firms and Markets," Working Papers 2010.47, Fondazione Eni Enrico Mattei.
  9. Michela Rancan, 2013. "The Value of Social Networks in Financial Markets," RSCAS Working Papers 2013/21, European University Institute.
  10. Markus Kinateder, 2009. "Team Formation in a Network," Working Papers 2009.36, Fondazione Eni Enrico Mattei.

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