Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/111212
Authors: 
Kushnir, Alexey
Nichifor, Alexandru
Year of Publication: 
2014
Series/Report no.: 
Working Paper Series, University of Zurich, Department of Economics 152
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.
Subjects: 
Networks
network formation
unilateral connections
bilateral connections
targeted information sharing
collective information sharing
Google
Facebook
babblers
friends
JEL: 
D47
D85
C72
C62
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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