Social Learning in Social Networks

33 Pages Posted: 4 Nov 2009  

Date Written: November 3, 2009

Abstract

This paper analyzes a model of social learning in a social network. Agents decide whether or not to adopt a new technology with unknown payoffs based on their prior beliefs and the experiences of their neighbors in the network. Using a mean-field approximation, I prove that the diffusion process always has at least one stable equilibrium, and I examine the dependence of the set of equilibria on the model parameters and the structure of the network. In particular, I show how first and second order stochastic dominance shifts in the degree distribution of the network impact diffusion. I find that the relationship between equilibrium diffusion levels and network structure depends on the distribution of payoffs to adoption and the distribution of agents' prior beliefs regarding those payoffs, and I derive the precise conditions characterizing those relationships.

Keywords: social networks, learning, diffusion, mean-field analysis, stochastic dominance

Suggested Citation

Lamberson, PJ, Social Learning in Social Networks (November 3, 2009). MIT Sloan Research Paper No. 4763-09. Available at SSRN: https://ssrn.com/abstract=1499424 or http://dx.doi.org/10.2139/ssrn.1499424

PJ Lamberson (Contact Author)

Northwestern University - Department of Management & Organizations ( email )

Evanston, IL
United States

HOME PAGE: http://www.kellogg.northwestern.edu/faculty/lamberson/

Northwestern Institute on Complex Systems (NICO) ( email )

600 Foster St
Evanston, IL 60208
United States

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