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Games of Social Influence

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  • Andrea Galeotti

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  • Sanjeev Goyal

Abstract

This paper considers a game played among players who seek to extract payoffs from a group of individuals subject to local interaction effects. We are interested in the relation between the network of social interaction and equilibrium actions and payoffs. We start with an analysis of two economic examples � strategic advertising in the presence of word of mouth advertising and social non-competitive marketing � to bring out the simple point that changing network connections can increase as well as decrease equilibrium actions and payoffs. This leads to an investigation of general conditions on payoffs under which equilibrium actions and payoffs increase/decrease with an increase in density of connections. We also develop conditions under which a greater dispersion in network connections leads unambiguously to positive and negative effects on actions as well as payoffs.

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File URL: http://www.essex.ac.uk/economics/discussion-papers/papers-text/dp639.pdf
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Bibliographic Info

Paper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 639.

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Date of creation: 25 Sep 2007
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Handle: RePEc:esx:essedp:639

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References

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  1. Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2004. "Who's Who in Networks. Wanted: The Key Player," Working Papers 178, Barcelona Graduate School of Economics.
  2. Dunia López-Pintado, 2004. "Diffusion In Complex Social Networks," Working Papers. Serie AD 2004-33, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  3. Ellison, Glenn & Fudenberg, Drew, 1995. "Word-of-Mouth Communication and Social Learning," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 93-125, February.
  4. Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 612-43, August.
  5. Sanjeev Goyal & Andrea Galeotti, 2007. "A Theory of Strategic Diffusion," Working Papers 2007.70, Fondazione Eni Enrico Mattei.
  6. Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
  7. Conley, T.G. & Udry, C.R., 2000. "Learning about a New Technology: Pineapple in Ghana," Papers 817, Yale - Economic Growth Center.
  8. Andrea Galeotti, 2004. "Consumers Networks and Search Equilibria," Tinbergen Institute Discussion Papers 04-075/1, Tinbergen Institute.
  9. Mark Rosenzweig & Andrew D. Foster, . "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Home Pages _068, University of Pennsylvania.
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