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Information transmission in hierarchies

Simon Schopohl
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Simon Schopohl: Center for Mathematical Economics, Bielefeld University

No 570, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: We analyze a game in which players with unique information are arranged in a hierarchy. In the lowest layer each player can decide in each of several rounds either to pass the information to his successor or to hold. While passing generates an immediate payoff according to the value of information, the player can also get an additional reward if he is the last player to pass. Facing this problem while discounting over time determines the player’s behavior. Once a successor has collected all information from his workers he starts to play the same game with his successor. We state conditions for different Subgame Perfect Nash Equilibria and analyse the time it takes each hierarchy to centralize the information. This allows us to compare different structures and state which structure centralizes fastest depending on the information distribution and other parameters. We show that the time the centralization takes is mostly affected by the least informed players.

Keywords: communication network; dynamic network game; hierarchical structure; information transmission (search for similar items in EconPapers)
Date: 2017-03-14
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-mic
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https://pub.uni-bielefeld.de/download/2909142/2909143 First Version, 2017 (application/x-download)

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Working Paper: Information Transmission in Hierarchies (2017) Downloads
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