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Individual Search and Social Networks

Author

Listed:
  • Sanjeev Goyal

    (Faculty of Economics and Christ's College, University of Cambridge)

  • Stephanie Rosenkranz

    (Department of Economics, Utrecht University)

  • Utz Weitzel

    (Department of Economics, Radboud University Nijmegen)

  • Vincent Buskens

    (Department of Sociology, Utrecht University)

Abstract

The explosion in online social networks motivates an enquiry into their structure and their welfare effects. A central feature of these networks is information sharing: online social networks lower the cost of getting information from others. These lower costs affect the attractiveness of individual search vis-a-vis a reliance on social networks. The paper reports the findings of an experiment on these effects. Our experiment shows that online networks can have large effects. Information acquisition is more dispersed and it is accompanied by denser social networks. Aggregate investment in information acquisition falls, but information available to individuals remains stable, due to increased networking. The overall effect is a significant increase in individual utility and aggregate welfare.

Suggested Citation

  • Sanjeev Goyal & Stephanie Rosenkranz & Utz Weitzel & Vincent Buskens, 2014. "Individual Search and Social Networks," Working Papers 2014.49, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2014.49
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    References listed on IDEAS

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    Cited by:

    1. Gaudeul, Alexia & Giannetti, Caterina, 2015. "Privacy, trust and social network formation," University of Göttingen Working Papers in Economics 269, University of Goettingen, Department of Economics.
    2. Boris van Leeuwen & Theo Offerman & Arthur Schram, 2020. "Competition for Status Creates Superstars: an Experiment on Public Good Provision and Network Formation," Journal of the European Economic Association, European Economic Association, vol. 18(2), pages 666-707.
    3. Gaudeul, Alexia & Giannetti, Caterina, 2017. "The effect of privacy concerns on social network formation," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 233-253.
    4. Syngjoo Choi & Edoardo Gallo & Shachar Kariv, 2015. "Networks in the laboratory," Cambridge Working Papers in Economics 1551, Faculty of Economics, University of Cambridge.

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    More about this item

    Keywords

    Social networks;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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