Networks of relations and Word-of-Mouth Communication

Steffen Lippert and Giancarlo Spagnolo

Games and Economic Behavior, 2011, vol. 72, issue 1, 202-217

Abstract: We study networks of relations - groups of agents linked by several cooperative relationships - exploring equilibrium conditions under different network configurations and information structures. Relationships are the links through which soft information can flow, and the value of a network lies in its ability to enforce agreements that could not be sustained without the information and sanctioning power provided by other network members. The model explains why network closure is important; why stable subnetworks may inhibit more valuable larger networks; and why information flows and action choices cannot be analyzed separately. Contagion strategies are suboptimal here, as they inhibit information transmission, delaying punishments.

Keywords: Collusion; Communication; Community; enforcement; Contagion; Cooperation; Multimarket; contact; Private; monitoring; Relational; contracts; Repeated; games; Reputation; Rumors; Social; capital; Social; collateral; Social; networks; Soft; information; Trust (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (42)

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Related works:
Working Paper: Networks of Relations (2010)
Working Paper: Networks of Relations and Social Capital (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:72:y:2011:i:1:p:202-217

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