IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

The opportunity cost of social relations: On the effectiveness of small worlds

  • Lorenzo Cassi
  • Lorenzo Zirulia


The aim of this paper is to extend the theoretical literature on knowledge and network structure by studying the use of social networks as a learning mechanism. The novelty of this approach is suggested by the empirical evidence on informal trading of know-how. In the model, we consider a set of actors who create and diffuse knowledge with the aim of increasing their own personal knowledge. They are located on a lattice (identifying the social space) and are directly connected to a small number of other individuals. We assume that individuals can learn individually or socially, and that individuals choose how to learn on the basis of a cost-benefit comparison. Within this framework, we compare network structures in terms of efficiency and equity. We find that the opportunity cost of using the network affects its optimal structure in terms of aggregate performance and that the small world does not emerge unambiguously as being the most efficient.

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Springer in its journal Journal of Evolutionary Economics.

Volume (Year): 18 (2008)
Issue (Month): 1 (February)
Pages: 77-101

in new window

Handle: RePEc:spr:joevec:v:18:y:2008:i:1:p:77-101
Contact details of provider: Web page:

Order Information: Web:

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.:

as in new window
  1. Edward L. Glaeser & Bruce Sacerdote & José A. Scheinkman, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 507-548.
  2. Sanjeev Goyal & Marco van der Leij & José Luis Moraga Gonzales, 2004. "Economics: An Emerging Small World?," CESifo Working Paper Series 1287, CESifo Group Munich.
  3. Venkatesh Bala & Sanjeev Goyal, 1998. "Learning from Neighbours," Review of Economic Studies, Oxford University Press, vol. 65(3), pages 595-621.
  4. Cowan Robin & David Paul & Foray Dominique, 1999. "The Explicit Economics of Knowledge Codification and Tacitness," Research Memorandum 025, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  5. Cowan Robin & Jonard Nicolas, 2000. "The Dynamics of Collective Invention," Research Memorandum 018, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  6. Piergiuseppe Morone & Richard Taylor, 2004. "Knowledge diffusion dynamics and network properties of face-to-face interactions," Journal of Evolutionary Economics, Springer, vol. 14(3), pages 327-351, 07.
  7. Dahl, Michael S. & Pedersen, Christian O.R., 2004. "Knowledge flows through informal contacts in industrial clusters: myth or reality?," Research Policy, Elsevier, vol. 33(10), pages 1673-1686, December.
  8. Mark Granovetter, 2005. "The Impact of Social Structure on Economic Outcomes," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 33-50, Winter.
  9. Cowan Robin & Jonard Nicolas, 1999. "Network Structure and the Diffusion of Knowledge," Research Memorandum 026, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  10. von Hippel, Eric, 1987. "Cooperation between rivals: Informal know-how trading," Research Policy, Elsevier, vol. 16(6), pages 291-302, December.
  11. Lundvall, Bengt-Ake & Johnson, Bjorn & Andersen, Esben Sloth & Dalum, Bent, 2002. "National systems of production, innovation and competence building," Research Policy, Elsevier, vol. 31(2), pages 213-231, February.
  12. Giuliani, Elisa & Bell, Martin, 2005. "The micro-determinants of meso-level learning and innovation: evidence from a Chilean wine cluster," Research Policy, Elsevier, vol. 34(1), pages 47-68, February.
  13. Cowan Robin & Jonard Nicolas & Özman Müge, 2003. "Knowledge Dynamics in a Network Industry," Research Memorandum 003, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  14. R. Cowan & N. Jonard & J.-B. Zimmermann, 2002. "The Joint Dynamics of Networks and Knowledge," Computing in Economics and Finance 2002 354, Society for Computational Economics.
  15. Cowan Robin & Jonard Nicolas & Zimmermann J-B, 2004. "On the creation of networks and knowledge," Research Memorandum 010, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  16. Malerba, Franco, 2002. "Sectoral systems of innovation and production," Research Policy, Elsevier, vol. 31(2), pages 247-264, February.
  17. Allen, Robert C., 1983. "Collective invention," Journal of Economic Behavior & Organization, Elsevier, vol. 4(1), pages 1-24, March.
  18. Piergiuseppe Morone & Richard Taylor, 2004. "Small World Dynamics and The Process of Knowledge Diffusion: The Case of The Metropolitan Area of Greater Santiago De Chile," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 7(2), pages 5.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:spr:joevec:v:18:y:2008:i:1:p:77-101. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)

or (Christopher F Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.