Twitter: An Investigation of the Impact of Network Communication

48 Pages Posted: 5 Mar 2010 Last revised: 9 Oct 2015

Date Written: February 26, 2010


This paper uses the popular social networking site Twitter to test recent theories on the importance of communication through networks. I create a unique data set that precisely measures the network size and credibility of each contributor to the site. I test the theory of DeMarzo et al (2003) that an agent's influence is a function of his credibility and the size of his network, as well as the Colla and Mele (2010) theory of correlated trading among social groups. I show that influence is a function of network credibility and network size. I also find that there is positively correlated trading among agents in a social network and negatively correlated trading with agents outside of the network. Finally, using portfolios sorted on level of attention, I find support for the Merton (1987) theory of investor recognition which predicts that low attention stocks should exhibit positive risk adjusted returns.

Keywords: Networks, Bounded rationality, Information linkage, Twitter

JEL Classification: G14, D82

Suggested Citation

Giannini, Robert Charles, Twitter: An Investigation of the Impact of Network Communication (February 26, 2010). Available at SSRN: or

Robert Charles Giannini (Contact Author)

Citadel ( email )

United States

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