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Network Multipliers: The Optimality of Targeting Neighbors

Andrea Galeotti () and Sanjeev Goyal

Review of Network Economics, 2012, vol. 11, issue 3, 1-11

Abstract: A firm wishes to inform a community of individuals about its product. Information travels within the community because of the social interactions between individuals. We establish that social interactions appear in a firm's payoff as a network multiplier, which is increasing both in the mean and in the variance of the distribution of connections. We then show that the degree distribution of a neighbor first order dominates the degree distribution of a node; so a firm must pick the neighbor of a node rather than a node itself as the target of communication. The advantages of employing an indirect communication strategy are greater in more dispersed networks.

Date: 2012
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DOI: 10.1515/1446-9022.1415

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