Circles of Trust
Santa Clara University - Leavey School of Business; European Corporate Governance Institute (ECGI)
Stanford University; Research Institute of Industrial Economics (IFN)
January 6, 2011
We study strategic transmission of rival information among individuals who have altruistic relations. Information sharing naturally takes the form of word-of-mouth communication. Yet, the social forces that promote communication can also undermine it. Contrary to conventional wisdom, larger social networks may spread information less, and better-connected individuals may receive less information. Therefore, when forming networks, individuals cluster into groups that share information and trust by limiting connections as a commitment to secrecy.
Keywords: Information transmission, communication, social networks, directed altruism, trust, secrecy, network formation
JEL Classification: C72, D00, D64, D83, O31
Date posted: January 9, 2011 ; Last revised: April 30, 2013
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