Individual Search and Social Networks

45 Pages Posted: 28 May 2014

See all articles by Sanjeev Goyal

Sanjeev Goyal

University of Cambridge

Stephanie Rosenkranz

Utrecht University - Utrecht University School of Economics

Utz Weitzel

Utrecht University - Utrecht University School of Economics; Radboud University - Economics Department, IMR

Vincent Buskens

Utrecht University - Department of Sociology/ICS; Erasmus School of Law, Erasmus University Rotterdam (EUR)

Date Written: May 27, 2014

Abstract

The explosion in online social networks motivates an enquiry into their structure and their welfare effects. A central feature of these networks is information sharing: online social networks lower the cost of getting information from others. These lower costs affect the attractiveness of individual search vis-a-vis a reliance on social networks. The paper reports the findings of an experiment on these effects. Our experiment shows that online networks can have large effects. Information acquisition is more dispersed and it is accompanied by denser social networks. Aggregate investment in information acquisition falls, but information available to individuals remains stable, due to increased networking. The overall effect is a significant increase in individual utility and aggregate welfare.

Keywords: Social networks

JEL Classification: D83, D85

Suggested Citation

Goyal, Sanjeev and Rosenkranz, Stephanie and Weitzel, Utz and Buskens, Vincent, Individual Search and Social Networks (May 27, 2014). FEEM Working Paper No. 49.2014. Available at SSRN: https://ssrn.com/abstract=2442241 or http://dx.doi.org/10.2139/ssrn.2442241

Sanjeev Goyal (Contact Author)

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Stephanie Rosenkranz

Utrecht University - Utrecht University School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
+31 30 253 9806 (Phone)
+31 30 253 7373 (Fax)

HOME PAGE: http://www.uu.nl/uupublish/defaculteit/persoonlijkepagi/rosenkranz/

Utz Weitzel

Utrecht University - Utrecht University School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

Radboud University - Economics Department, IMR ( email )

Nijmegen, 6500 HK
Netherlands

Vincent Buskens

Utrecht University - Department of Sociology/ICS ( email )

Heidelberglaan 2
Utrecht, 3584 CS
Netherlands

Erasmus School of Law, Erasmus University Rotterdam (EUR) ( email )

Rotterdam
Netherlands

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