Information Trading in Social Networks

Andrei Karavaev ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper considers information trading in fixed networks of economic agents who can only observe and trade with other agents with whom they are directly connected. We study the nature of price competition for information in this environment. The linear network, when the agents are located at the integer points of the real line, is a specific example I completely characterize. For the linear network there always exists a stationary equilibrium, where the strategies do not depend on time. I show that there is an equilibrium where any agent has a nonzero probability of staying uninformed forever. Under certain initial conditions this equilibrium is a limit of equilibria of finite-horizon games. The role of a transversality condition is emphasized, namely that the price in the transaction should not exceed the expected utility of all the agents who get the information due to the transaction. I show that the price offered does not converge to zero with time.

Keywords: Networks; information trading; information diffusion (search for similar items in EconPapers)
JEL-codes: Z13 D83 O33 D85 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-net and nep-soc
Date: 2008-03-15
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:9110

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