IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v157y2015icp212-235.html
   My bibliography  Save this article

Key leaders in social networks

Author

Listed:
  • Zhou, Junjie
  • Chen, Ying-Ju

Abstract

This paper examines optimal targeting and sequencing strategies in the setup proposed by Ballester et al. [3]. The setup features payoff externalities and strategic complementarity among players, who non-cooperatively determine their contributions. We first analyze a two-stage game in which players in the leader group make contributions before the follower group. We construct an exact index to identify the (single) key leader, and demonstrate that the key leader can differ substantially from the key player who most influences the network in the simultaneous-move game. Using Taylor expansions on the strength of network effects, we establish an isomorphism between the optimal leader group selection (targeting) strategy and the classical weighted maximum-cut problem. This approach leads to some design principles for unweighted complete graphs and bipartite graphs.

Suggested Citation

  • Zhou, Junjie & Chen, Ying-Ju, 2015. "Key leaders in social networks," Journal of Economic Theory, Elsevier, vol. 157(C), pages 212-235.
    • Handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:212-235
    DOI: 10.1016/j.jet.2015.01.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022053115000071
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jet.2015.01.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2006. "Who's Who in Networks. Wanted: The Key Player," Econometrica, Econometric Society, vol. 74(5), pages 1403-1417, September.
    2. Hermalin, Benjamin E, 1998. "Toward an Economic Theory of Leadership: Leading by Example," American Economic Review, American Economic Association, vol. 88(5), pages 1188-1206, December.
    3. Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2010. "Delinquent Networks," Journal of the European Economic Association, MIT Press, vol. 8(1), pages 34-61, March.
    4. Liu, Xiaodong & Patacchini, Eleonora & Zenou, Yves & Lee, Lung-Fei, 2011. "Criminal Networks: Who is the Key Player?," Research Papers in Economics 2011:7, Stockholm University, Department of Economics.
    5. Farrell, Joseph & Saloner, Garth, 1986. "Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation," American Economic Review, American Economic Association, vol. 76(5), pages 940-955, December.
    6. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    7. Jeffrey Rohlfs, 1974. "A Theory of Interdependent Demand for a Communications Service," Bell Journal of Economics, The RAND Corporation, vol. 5(1), pages 16-37, Spring.
    8. James Andreoni, 1998. "Toward a Theory of Charitable Fund-Raising," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1186-1213, December.
    9. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    10. Antoni Calvó-Armengol & Matthew O. Jackson, 2004. "The Effects of Social Networks on Employment and Inequality," American Economic Review, American Economic Association, vol. 94(3), pages 426-454, June.
    11. Ozan Candogan & Kostas Bimpikis & Asuman Ozdaglar, 2012. "Optimal Pricing in Networks with Externalities," Operations Research, INFORMS, vol. 60(4), pages 883-905, August.
    12. Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
    13. Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nizar Allouch, 2017. "Aggregation in Networks," Studies in Economics 1718, School of Economics, University of Kent.
    2. Yongli Li & Zhi-Ping Fan & Wei Zhang, 2018. "Network-based Referral Mechanism in a Crowdfunding-based Marketing Pattern," Papers 1808.03070, arXiv.org.
    3. Gershkov, Alex & Li, Jianpei & Schweinzer, Paul, 2016. "How to share it out: The value of information in teams," Journal of Economic Theory, Elsevier, vol. 162(C), pages 261-304.
    4. Junjie Zhou & Ying-Ju Chen, 2016. "Targeted Information Release in Social Networks," Operations Research, INFORMS, vol. 64(3), pages 721-735, June.
    5. Ying‐Ju Chen & Yves Zenou & Junjie Zhou, 2018. "Competitive pricing strategies in social networks," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 672-705, September.
    6. Belhaj, Mohamed & Deroïan, Frédéric, 2019. "Group targeting under networked synergies," Games and Economic Behavior, Elsevier, vol. 118(C), pages 29-46.
    7. Belhaj, Mohamed & Deroïan, Frédéric, 2018. "Targeting the key player: An incentive-based approach," Journal of Mathematical Economics, Elsevier, vol. 79(C), pages 57-64.
    8. Mohamed Belhaj & Frédéric Deroïan & Shahir Safi, 2020. "Costly agreement-based transfers and targeting on networks with synergies," Working Papers halshs-02558397, HAL.
    9. Jingjing Zhao & Yongli Li & Yunlong Ding & Chao Liu, 2019. "The value of leading customers in a crowdfunding-based marketing pattern," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-18, April.
    10. Belhaj, Mohamed & Deroïan, Frédéric & Safi, Shahir, 2023. "Targeting in networks under costly agreements," Games and Economic Behavior, Elsevier, vol. 140(C), pages 154-172.
    11. Ming Hu & Zizhuo Wang & Yinbo Feng, 2020. "Information Disclosure and Pricing Policies for Sales of Network Goods," Operations Research, INFORMS, vol. 68(4), pages 1162-1177, July.
    12. Li, Yongli & Luo, Peng & Pin, Paolo, 2021. "Link value, market scenario and referral networks," Journal of Economic Behavior & Organization, Elsevier, vol. 181(C), pages 135-155.
    13. de Martí, Joan & Zenou, Yves, 2015. "Network games with incomplete information," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 221-240.
    14. Zenou, Yves & Chen, Ying-Ju & Zhou, Junjie, 2015. "Multiple Activities for Socially-Connected Criminals," CEPR Discussion Papers 10709, C.E.P.R. Discussion Papers.
    15. Leister, C. Matthew, 2020. "Information acquisition and welfare in network games," Games and Economic Behavior, Elsevier, vol. 122(C), pages 453-475.
    16. Li, Jian & Zhou, Junjie & Chen, Ying-Ju, 2022. "The limit of targeting in networks," Journal of Economic Theory, Elsevier, vol. 201(C).
    17. Baris Ata & Alexandre Belloni & Ozan Candogan, 2018. "Latent Agents in Networks: Estimation and Targeting," Papers 1808.04878, arXiv.org, revised Jan 2022.
    18. Junjie Zhou & Chen‐Nan Liao & Ying‐Ju Chen, 2023. "Optimal selling scheme in social networks: hierarchical signaling, sequential selling, and chain structure," Production and Operations Management, Production and Operations Management Society, vol. 32(7), pages 2138-2153, July.
    19. Zhou, Junjie, 2016. "Economics of leadership and hierarchy," Games and Economic Behavior, Elsevier, vol. 95(C), pages 88-106.
    20. Jadbabaie, Ali & Kakhbod, Ali, 2019. "Optimal contracting in networks," Journal of Economic Theory, Elsevier, vol. 183(C), pages 1094-1153.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Junjie Zhou & Ying-Ju Chen, 2016. "Targeted Information Release in Social Networks," Operations Research, INFORMS, vol. 64(3), pages 721-735, June.
    2. Li, Jian & Zhou, Junjie & Chen, Ying-Ju, 2021. "The Limit of Targeting in Networks," ISU General Staff Papers 202112081957590000, Iowa State University, Department of Economics.
    3. Li, Jian & Zhou, Junjie & Chen, Ying-Ju, 2022. "The limit of targeting in networks," Journal of Economic Theory, Elsevier, vol. 201(C).
    4. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    5. Junjie Zhou & Ying-Ju Chen, 2013. "Targeted information release in social networks," Working Papers 13-04, NET Institute.
    6. Ying‐Ju Chen & Yves Zenou & Junjie Zhou, 2018. "Competitive pricing strategies in social networks," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 672-705, September.
    7. Junjie Zhou & Ying-Ju Chen, 2014. "Sequential selling and information dissemination in the presence of network effects," Working Papers 14-04, NET Institute.
    8. Chen, Ying-Ju & Zenou, Yves & Zhou, Junjie, 2022. "The impact of network topology and market structure on pricing," Journal of Economic Theory, Elsevier, vol. 204(C).
    9. Yang Zhang & Ying-Ju Chen, 2020. "Optimal Nonlinear Pricing in Social Networks Under Asymmetric Network Information," Operations Research, INFORMS, vol. 68(3), pages 818-833, May.
    10. Tatsuhiro Shichijo & Emiko Fukuda, 2019. "A dynamic game analysis of Internet services with network externalities," Theory and Decision, Springer, vol. 86(3), pages 361-388, May.
    11. Topa, Giorgio & Zenou, Yves, 2015. "Neighborhood and Network Effects," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 561-624, Elsevier.
    12. Yang Sun & Wei Zhao & Junjie Zhou, 2021. "Structural Interventions in Networks," Papers 2101.12420, arXiv.org, revised Feb 2021.
    13. Zenou, Yves & Chen, Ying-Ju & Zhou, Junjie, 2020. "Network Topology and Market Structure," CEPR Discussion Papers 14495, C.E.P.R. Discussion Papers.
    14. Corrado Benassi & Marcella Scrimitore, 2017. "Income Distribution in Network Markets," Journal of Industry, Competition and Trade, Springer, vol. 17(3), pages 251-271, September.
    15. Zenou, Yves, 2012. "Networks in Economics," CEPR Discussion Papers 9021, C.E.P.R. Discussion Papers.
    16. Netsanet Haile & Jörn Altmann, 2016. "Structural analysis of value creation in software service platforms," Electronic Markets, Springer;IIM University of St. Gallen, vol. 26(2), pages 129-142, May.
    17. Robert J. Kauffman & James McAndrews & Yu-Ming Wang, 2000. "Opening the “Black Box” of Network Externalities in Network Adoption," Information Systems Research, INFORMS, vol. 11(1), pages 61-82, March.
    18. Belhaj, Mohamed & Deroïan, Frédéric, 2018. "Targeting the key player: An incentive-based approach," Journal of Mathematical Economics, Elsevier, vol. 79(C), pages 57-64.
    19. Netsanet Haile & Jorn Altmann, 2013. "Estimating the Value Obtained from Using a Software Service Platform," TEMEP Discussion Papers 2013105, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Aug 2013.
    20. Jullien, Bruno & Pavan, Alessandro & Rysman, Marc, 2021. "Two-sided Markets, Pricing, and Network Effects," TSE Working Papers 21-1238, Toulouse School of Economics (TSE).

    More about this item

    Keywords

    Social networks; Dynamic games; Key leader; Targeting; Sequencing;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D29 - Microeconomics - - Production and Organizations - - - Other
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:212-235. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.