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Getting the Right Spin: A Theory of Value of Social Networks

  • Pier-André Bouchard St-Amant

    ()

    (Queen`s Economics Department)

I examine the problem of maximizing the spread of information in a context where users of a network decide which piece of information is shared. A company thus provides initial information to some users and they then choose what to share to their neighbours. These actions of sharing and choosing produce the characteristics of word-of-mouth advertising over time. I then answer the two following questions: what is the best word-of-mouth campaign that the company can perform and second, what is the value of such a campaign? The optimal solution can be understood as a Nash Equilibria that maximizes the concentration of the initial information to a small group of users. Such solution contrasts with standard measures of user influence and I show that they can sometime be seriously misleading. I provide an exact solution for a wide class of generic network topologies and an algorithm to compute it in polynomial time.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1293.pdf
File Function: First version 2012
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1293.

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Length: 43 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:qed:wpaper:1293
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  1. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
  2. Bala, V. & Goyal, S., 1995. "Learning from Neighbors," Econometric Institute Research Papers EI 9549-/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  3. Constanza Fosco & Annick Laruelle & Angel Sánchez, 2011. "Turnout Intention And Random Social Networks," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 14(01), pages 31-53.
  4. Ting Liu & Pasquale Schiraldi, 2012. "New product launch: herd seeking or herd preventing?," Economic Theory, Springer, vol. 51(3), pages 627-648, November.
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