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Targeted vs. collective information sharing in networks

Author

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  • Alexey Kushnir
  • Alexandru Nichifor

Abstract

We introduce a simple two-stage game of endogenous network formation and information sharing for reasoning about the optimal design of social networks like Facebook or Google+. We distinguish between unilateral and bilateral connections and between targeted and collective information sharing. Agents value being connected to other agents and sharing and receiving information. We consider multiple utility specifications. We show that the game always has an equilibrium in pure strategies and then we study how the network design and the utility specifications affect welfare. Surprisingly, we find that in general, targeted information sharing is not necessarily better than collective information sharing. However, if all agents are either "babblers" or "friends", irrespective of whether the network is unilateral or bilateral, in equilibrium, targeted information sharing yields higher welfare than collective information sharing.

Suggested Citation

  • Alexey Kushnir & Alexandru Nichifor, 2014. "Targeted vs. collective information sharing in networks," ECON - Working Papers 152, Department of Economics - University of Zurich.
  • Handle: RePEc:zur:econwp:152
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    File URL: http://www.econ.uzh.ch/static/wp/econwp152.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Networks; network formation; unilateral connections; bilateral connections; targeted information sharing; collective information sharing; Google; Facebook; babblers; friends;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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