Circles of Trust
Posted: 9 Jan 2011 Last revised: 30 Apr 2013
Date Written: 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
Suggested Citation: Suggested Citation