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Online Social Networks: Approval by Design

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  • Matthew Ellman

    (Institute of Economic Analysis, IAE-CSIC, and Barcelona GSE)

Abstract

Online social networks (OSN) influence the transmission of information in society. This paper analyzes how a profit-motivated OSN designs the instant feedback options, such as “likes†or up-votes and down-votes or disapprovals, that it aggregates into user ratings, and how these design choices affect social and economic outcomes. The OSN seeks to maximize advertising revenues via maximal engagement. We compare OSN designs that allow users to only up-vote other users' content contributions or “posts†against OSN designs that allow both up and down votes. Users care about what others think of them. The feedback system mediates what users with imperfect private signals learn about each others' contributions and about each other. The OSN design affects both the expected social approval gains from engaging as a contributor and the value to users from engaging as viewers of others' content. Up and down votes improve viewers information but removing the down-vote option can raise user willingness to contribute content by reducing the threat of unambiguous disapproval. We investigate a full set of OSN designs in a range of social contexts.

Suggested Citation

  • Matthew Ellman, 2017. "Online Social Networks: Approval by Design," Working Papers 17-18, NET Institute.
    • Handle: RePEc:net:wpaper:1718
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    File URL: http://www.netinst.org/Ellman_17-18.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Online social networks; feedback design; user-generated content; quality; rating systems; platform economics; media economics.;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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