Follow the Leader: Steady State Analysis of a Dynamic Social Network

David Goldbaum

No 158, Working Paper Series from Finance Discipline Group, UTS Business School, University of Technology, Sydney

Abstract: A social pyramid is show to be the unique steady state social structure when agents gain utility from being early adopters of subsequently popular trends. The environment is related to a majority game, but introduces the importance of the timing of adoption. Utility derived from making a popular choice independent of timing is demonstrated as essential to support the hierarchy. The proposed environment is relevant to a number of settings in which leadership and timing of decisions are important or where being perceived as a trend setter is rewarded. The leadership position can be self-reinforcing. For a professional critic, for example, a cult-of personality can dictate popular tastes, such as in art, food, and wine markets. A social hierarchy can also apply to the introduction of new products or ideas including academic research and financial market analysts.

Keywords: dynamic network; social interaction; consumer choice (search for similar items in EconPapers)
Pages: 24
Date: 2009-01-01
New Economics Papers: this item is included in nep-net and nep-soc
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