Connectors and Influencers

Syngjoo Choi, Sanjeev Goyal and Frédéric Moisan
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Frédéric Moisan: Division of Social Science

No 20220077, Working Papers from New York University Abu Dhabi, Department of Social Science

Abstract: We consider a setting in which individuals can purchase information at a cost and form costly links to access information purchased by others. The theory predicts that in every equilibrium of this game the network is a `star'. For small groups, there exists a unique purchase configuration -a pure influencer outcome, in which the hub node purchases information while all others free ride. For large groups, there exists, in addition, a pure connector outcome in which the hub purchases no information and the peripheral players purchase information. We test these predictions on a new experimental platform with asynchronous activity in continuous time. We start with a baseline setting where subjects only see their own payoffs. We find that subjects create a star network. In small groups, the hub purchases equilibrium level information, but in large groups the hub purchases excessive information and as a result earns low payoffs. To study the reasons for this excessive investment we propose a treatment in which subjects see everyone's payoffs. We find that in small groups the pure influencer out- come obtains but that in large groups the pure-connector outcome now becomes common, suggesting that information and group size interact in powerful ways to shape networks and payoffs.

Pages: 74 pages
Date: 2022-04, Revised 2022-06
New Economics Papers: this item is included in nep-exp, nep-gth, nep-mic and nep-net
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Citations: View citations in EconPapers (1)

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Working Paper: Connectors and Influencers (2019)
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