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Strategic Diffusion: Public Goods vs. Public Bads

Author

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  • Campbell, Arthur
  • Thornton, D.J.
  • Zenou, Yves

Abstract

We study the role of influence in a model of the diffusion of social behaviors in a network. Individual behavior creates either positive spillovers (public goods) or negative spillovers (public bads). Our notion of influence captures the causal effect of an agent's adoption decision on the adoption decision of others in the network. We study a phase transition in equilibrium behavior around which viral equilibria—where diffusion occurs among a nontrivial fraction of the population—emerge. Public goods exhibit a continuous phase transition in equilibrium adoption, while public bads exhibit a discontinuous transition-- they emerge suddenly. Our findings reconcile disparate evidence that attending a public protest is a strategic complement in some settings and a substitute in others.

Suggested Citation

  • Campbell, Arthur & Thornton, D.J. & Zenou, Yves, 2024. "Strategic Diffusion: Public Goods vs. Public Bads," CEPR Discussion Papers 19443, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19443
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    File URL: https://cepr.org/publications/DP19443
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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