Connectors and Influencers
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Authors
Choi, S.
Goyal, S.
Moisan, F.
Publication Date
2019-03-28Series
Cambridge Working Papers in Economics
Cambridge-INET Working Paper Series
Publisher
Faculty of Economics, University of Cambridge
Type
Working Paper
Previous Version(s)
Metadata
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Choi, S., Goyal, S., & Moisan, F. (2019). Connectors and Influencers. https://doi.org/10.17863/CAM.83967
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.<br /><br />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.
Identifiers
CWPE1935, C-INET1909
This record's DOI: https://doi.org/10.17863/CAM.83967
This record's URL: https://www.repository.cam.ac.uk/handle/1810/336546
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