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Information Trading in Social Networks

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Author Info
Karavaev, Andrei

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Abstract

This paper considers information trading in fixed networks of economic agents who can only observe and trade with other agents with whom they are directly connected. We study the nature of price competition for information in this environment. The linear network, when the agents are located at the integer points of the real line, is a specific example I completely characterize. For the linear network there always exists a stationary equilibrium, where the strategies do not depend on time. I show that there is an equilibrium where any agent has a nonzero probability of staying uninformed forever. Under certain initial conditions this equilibrium is a limit of equilibria of finite-horizon games. The role of a transversality condition is emphasized, namely that the price in the transaction should not exceed the expected utility of all the agents who get the information due to the transaction. I show that the price offered does not converge to zero with time.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9110.

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Date of creation: 15 Mar 2008
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Handle: RePEc:pra:mprapa:9110

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Related research
Keywords: Networks information trading information diffusion

Other versions of this item:

Find related papers by JEL classification:
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Drew Fudenberg & David K. Levine & Eric Maskin, 1994. "The Folk Theorem with Imperfect Public Information," Levine's Working Paper Archive 394, UCLA Department of Economics. [Downloadable!]
    Other versions:
  2. Muto, Shigeo, 1986. "An Information Good Market with Symmetric Externalities," Econometrica, Econometric Society, vol. 54(2), pages 295-312, March. [Downloadable!] (restricted)
  3. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December. [Downloadable!] (restricted)
    Other versions:
  4. Abhijit Banerjee & Kaivan Munshi, 2000. "Networks, Migration and Investment: Insiders and Outsiders in Tirupur's Production Cluster," William Davidson Institute Working Papers Series 313, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  5. Conley, T.G. & Udry, C.R., 2000. "Learning about a New Technology: Pineapple in Ghana," Papers 817, Yale - Economic Growth Center.
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  6. Eshel, Ilan & Samuelson, Larry & Shaked, Avner, 1998. "Altruists, Egoists, and Hooligans in a Local Interaction Model," American Economic Review, American Economic Association, vol. 88(1), pages 157-79, March. [Downloadable!] (restricted)
  7. Polanski, Arnold, 2007. "A decentralized model of information pricing in networks," Journal of Economic Theory, Elsevier, vol. 136(1), pages 497-512, September. [Downloadable!] (restricted)
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This page was last updated on 2008-11-18.

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