Targeted information release in social networks

Junjie Zhou (zhoujj03001@gmail.com) and Ying-Ju Chen (chen@ieor.berkeley.edu)
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Junjie Zhou: School of International Business Administration, Shanghai University of Finance and Economics
Ying-Ju Chen: University of California at Berkeley

No 13-04, Working Papers from NET Institute

Abstract: As a common practice, various firms initially make information and access to their products/services scarce within a social network; identifying influential players that facilitate information dissemination emerges as a pivotal step for their success. In this paper, we tackle this problem using a stylized model that features payoff externalities and local network effects, and the network designer is allowed to release information to only a subset of players (leaders); these targeted players make their contributions first and the rest followers move subsequently after observing the leaders' decisions. In the presence of incomplete information, the signaling incentive drives the optimal selection of leaders and can lead to a first-order materialistic effect on the equilibrium outcomes. We propose a novel index for the key leader selection (i.e., a single player to provide information to) that can be substantially different from the key player index in Ballester (2006)and the key leader index with complete information proposed in Zhou and Chen (2013). We also show that in undirected graphs, the optimal leader group identified in Zhou and Chen (2013) is exactly the optimal follower group when signaling is present. The pecking order in complete graphs suggests that the leader should be selected by the ascending order of intrinsic valuations. We also examine the out-tree hierarchical structure that describes a typical economic organization. The key leader turns out to be the one that stays in the middle, and it is not necessarily exactly the central player in the network.

Keywords: social network; signaling; information management; targeted advertising; game theory (search for similar items in EconPapers)
JEL-codes: D21 D29 D82 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013-09
New Economics Papers: this item is included in nep-cdm, nep-com, nep-cta, nep-gth, nep-mic, nep-net and nep-ure
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