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Optimal influence under observational learning

Nikolas Tsakas

No 4, Gecomplexity Discussion Paper Series from Action IS1104 "The EU in the new complex geography of economic systems: models, tools and policy evaluation"

Abstract: We study a problem of optimal influence in a society where agents learn from their neighbors. We consider a firm that seeks to maximize the diffusion of a new product whose quality is ex–ante uncertain, to a market where consumers are able to compare the qualities of two alternative products as soon as they observe both of them. The firm can seed the product to a subset of the population and our goal is to find which is the optimal subset to target. We provide a necessary and sufficient condition that fully characterizes the optimal targeting strategy for any network structure. The key parameter in this condition is the agents’ decay centrality, which is a measure that takes into account how close an agent is to others, but in a way that very distant agents are weighted less than closer ones.

Keywords: Social Networks; Targeting; Diffusion; Observational Learning. (search for similar items in EconPapers)
JEL-codes: D83 D85 H23 M37 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014-11, Revised 2014-11
New Economics Papers: this item is included in nep-cta, nep-mic, nep-net and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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http://www.gecomplexity-cost.eu/repec/cst/wpaper/geco_dp_4.pdf First version, 2014 (application/pdf)

Related works:
Working Paper: Optimal influence under observational learning (2015) Downloads
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