Targeted Information Release in Social Networks

Junjie Zhou () and Ying-Ju Chen ()
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Junjie Zhou: School of International Business Administration, Shanghai University of Finance and Economics, Shanghai, 200433, China
Ying-Ju Chen: School of Business and Management and School of Engineering, The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong

Operations Research, 2016, vol. 64, issue 3, 721-735

Abstract: As various firms initially make information and access to their products/services scarce within a social network, identifying influential players 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. 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 equilibrium contributions.We propose a novel index for the key leader selection with incomplete information that can be substantially different from the key player index in Ballester et al. (2006) [Ballester C, Calvó-Armengol A, Zenou Y (2006) Who’s who in networks. wanted: The key player. Econometrica 74(5):1403–1417] and the key leader index with complete information proposed in Zhou and Chen (2015) [Zhou J, Chen Y-J (2015) Key leaders in social networks. J. Econom. Theory 157:212–235]. We also show that in undirected graphs, the optimal leader group identified in Zhou and Chen (2015) is exactly the optimal follower group when signaling is present. In particular, if the graphs are complete, the network designer ranks the players by the ascending order of their intrinsic valuations, and the leaders are those with lower intrinsic valuations. In the out-tree hierarchical structure, 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)
Date: 2016
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Citations: View citations in EconPapers (10)

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