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Targeted vs. collective information sharing in networks

Alexey Kushnir () and Alexandru Nichifor

No 152, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: We introduce a simple two-stage game of endogenous network formation and information sharing for reasoning about the optimal design of social networks like Facebook or Google+. We distinguish between unilateral and bilateral connections and between targeted and collective information sharing. Agents value being connected to other agents and sharing and receiving information. We consider multiple utility specifications. We show that the game always has an equilibrium in pure strategies and then we study how the network design and the utility specifications affect welfare. Surprisingly, we find that in general, targeted information sharing is not necessarily better than collective information sharing. However, if all agents are either "babblers" or "friends", irrespective of whether the network is unilateral or bilateral, in equilibrium, targeted information sharing yields higher welfare than collective information sharing.

Keywords: Networks; network formation; unilateral connections; bilateral connections; targeted information sharing; collective information sharing; Google; Facebook; babblers; friends (search for similar items in EconPapers)
JEL-codes: C62 C72 D47 D85 (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-cdm, nep-cta, nep-ger, nep-gth, nep-mic, nep-net and nep-soc
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