Optimal Influence Strategies in Social Networks

8 Pages Posted: 18 May 2015

See all articles by Christos Bilanakos

Christos Bilanakos

Athens University of Economics and Business - Department of Management Science and Technology

Dionisios Sotiropoulos

University of Piraeus; University of Piraeus

Ifigeneia Georgoula

Athens University of Economics and Business

George M. Giaglis

Athens University of Economics and Business

Date Written: May 16, 2015

Abstract

This article suggests a modeling framework to investigate the optimal strategy followed by a monopolistic firm to manipulate the process of opinion formation in a social network. We consider a network which consists of the monopolist and a set of consumers who communicate to form their beliefs about the underlying product quality. When consumers’ initial beliefs are uniform, we analytically and numerically show that the firm’s optimal influence strategy always involves targeting the most influential consumer. We characterize the optimal amount of resources that should be allocated by the firm to this kind of manipulative activity. For the case of non-uniform initial beliefs, we rely on numerical methods to show that the monopolist might have an incentive to target the least influential consumer if the latter’s initial opinion is low enough. The equilibrium valuation of the good and the firm’s profitability are minimized when consumers’ limiting influences on the consensus belief are equal, implying that the monopolist benefits from the presence of consumers with divergent strategic locations in the network.

Keywords: influence strategy, monopoly, opinion formation, social network.

JEL Classification: D42, D83, L15, M31

Suggested Citation

Bilanakos, Christos and Sotiropoulos, Dionisios and Sotiropoulos, Dionisios and Georgoula, Ifigeneia and Giaglis, George M., Optimal Influence Strategies in Social Networks (May 16, 2015). Available at SSRN: https://ssrn.com/abstract=2606937 or http://dx.doi.org/10.2139/ssrn.2606937

Christos Bilanakos

Athens University of Economics and Business - Department of Management Science and Technology ( email )

Athens GR-11362
Greece

Dionisios Sotiropoulos

University of Piraeus ( email )

Athens
Greece

University of Piraeus ( email )

Karaoli and Dimitriou 80
80 KARAOLI & DIMITRIOU STREET
Piraeus, Attiki 18534
Greece

Ifigeneia Georgoula (Contact Author)

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

George M. Giaglis

Athens University of Economics and Business ( email )

Athens, 104 34

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