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Optimal influence under observational learning

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  • Nikolas Tsakas

Abstract

We study the optimal targeting problem of a firm that seeks to maximize the diffusion of a product in a society where agents learn from their neighbors. The firm can seed the product to a subset of the population and our goal is to find which is the optimal subset to target. We provide a condition that characterizes the optimal targeting strategy for any network structure. The key parameter in this condition is the agents' decay centrality, which takes into account how close an agent is to others, in a way that distant agents are weighted less than closer ones.

Suggested Citation

  • Nikolas Tsakas, 2015. "Optimal influence under observational learning," University of Cyprus Working Papers in Economics 10-2015, University of Cyprus Department of Economics.
    • Handle: RePEc:ucy:cypeua:10-2015
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    References listed on IDEAS

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    1. Apesteguia, Jose & Huck, Steffen & Oechssler, Jorg, 2007. "Imitation--theory and experimental evidence," Journal of Economic Theory, Elsevier, vol. 136(1), pages 217-235, September.
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    3. Tsakas, Nikolas, 2017. "Diffusion by imitation: The importance of targeting agents," Journal of Economic Behavior & Organization, Elsevier, vol. 139(C), pages 118-151.
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    Cited by:

    1. Rusinowska, Agnieszka & Taalaibekova, Akylai, 2019. "Opinion formation and targeting when persuaders have extreme and centrist opinions," Journal of Mathematical Economics, Elsevier, vol. 84(C), pages 9-27.
    2. Tsakas, Nikolas, 2017. "Diffusion by imitation: The importance of targeting agents," Journal of Economic Behavior & Organization, Elsevier, vol. 139(C), pages 118-151.
    3. Michel Grabisch & Antoine Mandel & Agnieszka Rusinowska & Emily Tanimura, 2018. "Strategic Influence in Social Networks," Mathematics of Operations Research, INFORMS, vol. 43(1), pages 29-50, February.
    4. Tsakas Nikolas, 2019. "On Decay Centrality," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 19(1), pages 1-18, January.

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    More about this item

    Keywords

    Social Networks; Targeting; Diffusion; Observational Learning;
    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
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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