The Opportunity Cost of Social Relations: on the Effectiveness of Small Worlds

Lorenzo Cassi and Lorenzo Zirulia

No 175, KITeS Working Papers from KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy

Abstract: The aim of this paper is to extend the theoretical literature on knowledge and network structure by considering explicitly the choice to use the social network as a learning mechanism. In the model, we consider a set of actors that creates and diffuses knowledge. They are located on a lattice (identifying the social space) and they are directly connected with a small number of other individuals. Their aim is to increase their personal knowledge. We assume that individuals can learn in two ways: individually, by elaborating their personal knowledge; or socially, by interacting with other individuals in their social neighbourhood. Given this framework, we compare network structures in terms of efficiency and equity. We find that networks characterized by low average distance perform well in the short run, when the opportunity cost of using the network is low, but cliquish networks are more efficient in the long run, when the opportunity cost is high. However, a "small world" structure, characterized both by low average distance and high cliquishness, is the most equal structure in terms of knowledge distribution.

Keywords: Knowledge; Networks; Small worlds; Diffusion; Learning (search for similar items in EconPapers)
JEL-codes: D83 O33 Z13 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2005-09, Revised 2005-09
New Economics Papers: this item is included in nep-net, nep-soc and nep-ure
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Related works:
Journal Article: The opportunity cost of social relations: On the effectiveness of small worlds (2008)
Working Paper: The opportunity cost of social relations: on the effectiviness of small worlds (2008)
Working Paper: The opportunity cost of social relations: on the effectiviness of small worlds (2008)
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