Targeted vs. Collective Information Sharing in Networks

University of Zurich, Department of Economics, Working Paper No. 152

26 Pages Posted: 10 Apr 2014

See all articles by Alexey Kushnir

Alexey Kushnir

Carnegie Mellon University - David A. Tepper School of Business

Alexandru Nichifor

University of St. Andrews - School of Economics and Finance

Date Written: April 4, 2014

Abstract

We introduce a simple two-stage game of endogenous network formation and information sharing for reasoning about the optimal design of social networks like Facebook or Google. We distinguish between unilateral and bilateral connections and between targeted and collective information sharing. Agents value being connected to other agents and sharing and receiving information. We consider multiple utility specifications. We show that the game always has an equilibrium in pure strategies and then we study how the network design and the utility specifications affect welfare. Surprisingly, we find that in general, targeted information sharing is not necessarily better than collective information sharing. However, if all agents are either "babblers" or "friends", irrespective of whether the network is unilateral or bilateral, in equilibrium, targeted information sharing yields higher welfare than collective information sharing.

Keywords: networks, network formation, unilateral connections, bilateral connections, targeted information sharing, collective information sharing, Google, Facebook, babblers, friends

JEL Classification: D47, D85, C72, C62

Suggested Citation

Kushnir, Alexey I. and Nichifor, Alexandru, Targeted vs. Collective Information Sharing in Networks (April 4, 2014). University of Zurich, Department of Economics, Working Paper No. 152, Available at SSRN: https://ssrn.com/abstract=2422444 or http://dx.doi.org/10.2139/ssrn.2422444

Alexey I. Kushnir (Contact Author)

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

Alexandru Nichifor

University of St. Andrews - School of Economics and Finance ( email )

Castlecliffe
Saint Andrews, Fife KY16 9SS
United Kingdom

HOME PAGE: http://www.nichifor.net

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