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Information Acquisition and Exchange in Social Networks

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  • Sanjeev Goyal
  • Stephanie Rosenkranz
  • Utz Weitze
  • Vincent Buskens

Abstract

A central feature of social networks is information sharing. The Internet and related computing technologies define the relative costs of private information acquisition and forming links with others. This paper presents an experiment on the effects of changing costs.We find that a decline in relative costs of linking makes private investments more dispersed and gives rise to denser social networks. Aggregate investment falls, but individuals access to investment remains stable, due to increased networking. The overall effect is a significant increase in individual utility and aggregate welfare.

Suggested Citation

  • Sanjeev Goyal & Stephanie Rosenkranz & Utz Weitze & Vincent Buskens, 2015. "Information Acquisition and Exchange in Social Networks," Cambridge Working Papers in Economics 1566, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1566
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    Cited by:

    1. Liu, Jia & Sonntag, Axel & Zizzo, Daniel John, 2022. "Information defaults in repeated public good provision," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 356-369.
    2. Jakob Grazzini & Domenico Massaro, 2021. "Dispersed information, social networks, and aggregate behavior," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1129-1148, July.
    3. Myatt, David P. & Wallace, Chris, 2019. "Information acquisition and use by networked players," Journal of Economic Theory, Elsevier, vol. 182(C), pages 360-401.
    4. Aymanns, Christoph & Foerster, Jakob & Georg, Co-Pierre & Weber, Matthias, 2022. "Fake News in Social Networks," SocArXiv y4mkd, Center for Open Science.
    5. Choi, S. & Goyal, S. & Moisan, F., 2020. "Brokerage Rents and Intermediation Networks," Cambridge Working Papers in Economics 2005, Faculty of Economics, University of Cambridge.
    6. Choi, S & Goyal, S. & Moisan, F., 2019. "Connectors and Influencers," Cambridge Working Papers in Economics 1935, Faculty of Economics, University of Cambridge.
    7. Ying Chen & Tom Lane & Stuart McDonald, 2023. "Endogenous Network Formation in Local Public Goods: An Experimental Analysis," Discussion Papers 2023-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    8. Choi, S. & Goyal, G. & Moisan, F., 2020. "Large Scale Experiments on Networks: A New Platform with Applications," Cambridge Working Papers in Economics 2063, Faculty of Economics, University of Cambridge.

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