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Getting The Right Spin: A Theory Of Value Of Social Networks

Author

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  • Pier-Andre Bouchard St-Amant

    (Department of Economics, Queen's University)

Abstract

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.

Suggested Citation

  • Pier-Andre Bouchard St-Amant, 2012. "Getting The Right Spin: A Theory Of Value Of Social Networks," Working Paper 1293, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1293
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1293.pdf
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    References listed on IDEAS

    as
    1. Ting Liu & Pasquale Schiraldi, 2012. "New product launch: herd seeking or herd preventing?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(3), pages 627-648, November.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Network Theory; Viral Communication; Word of Mouth Advertising;
    All these keywords.

    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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