Circles of Trust
Samuel Lee
New York University (NYU) - Leonard N. Stern School of Business; European Corporate Governance Institute (ECGI)
Petra Persson
Columbia University; Research Institute of Industrial Economics (IFN)
January 6, 2011
Abstract:
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
working papers series
Suggested Citation
Lee, Samuel and Persson, Petra, Circles of Trust (January 6, 2011). Available at SSRN: http://ssrn.com/abstract=1736200 or http://dx.doi.org/10.2139/ssrn.1736200
