Information Trading in Social Networks
AbstractThis 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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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 9110.
Date of creation: 15 Mar 2008
Date of revision:
Networks; information trading; information diffusion;
Find related papers by JEL classification:
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-21 (All new papers)
- NEP-CTA-2008-06-21 (Contract Theory & Applications)
- NEP-NET-2008-06-21 (Network Economics)
- NEP-SOC-2008-06-21 (Social Norms & Social Capital)
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