Connectors and Influencers

Abstract

We study a setting in which personal acquisition of information is costly and maintaining personal contacts to share information socially is also costly. The theory predicts star networks, with small groups sustaining an active hub and large groups allowing in addition for an inactive hub equilibrium. Experiments with small (8 subjects) and large (50 subjects) groups show star-like networks throughout. In small groups, behaviour matches the active hub prediction. In large groups, hubs are inactive or engage in activity far in excess of the active hub equilibrium, depending on how much information subjects are given on their own and others’ earnings. Hub’s activity level shapes relative earnings of subjects and the overall performance of the group.