nep-gth New Economics Papers
on Game Theory
Issue of 2014‒06‒22
25 papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Pairing Games and Markets By Ahmet Alkan; Alparslan Tuncay
  2. The core of games on ordered structures and graphs By Michel Grabisch
  3. Distributional Perfect Equilibrium in Bayesian Games with Applications to Auctions By Bajoori, Elnaz
  4. On the restricted cores and the bounded core of games on distributive lattices By Michel Grabisch; Peter Sudhölter
  5. An Experimental Study on the Effect of Ambiguity in a Coordination Game By David Kelsey; Sara le Roux
  6. Rent Seeking and Power Hierarchies: A Noncooperative Model of Network Formation with Antagonistic Links By Kenan Huremovic
  7. Risk Allocation under Liquidity Constraints By Péter Csóka; P. Jean-Jacques Herings
  8. A Sequential Allocation Problem: The Asymptotic Distribution of Resources By Hurt, Wesley; Osorio, Antonio
  9. Trust and Manipulation in Social Networks By Manuel Förster; Ana Mauleon; Vincent J. Vannetelbosch
  10. Plans as conditional strategies: A concept enabling cooperation in the Prisoners' Dilemma? By Dilger, Alexander
  11. A Note on Values for Markovian Coalition Processes By Ulrich Faigle; Michel Grabisch
  12. Cooperative R&D networks among firms and public research institutions By Marco Marinucci
  13. Formation of Bargaining Networks Via Link Sharing By Sofia Priazhkina; Frank Page
  14. Cognitive ability, character skills, and learning to play equilibrium: A level-k analysis By David Gill; Victoria Prowse
  15. The Paradox of Misaligned Profiling: Theory and Experimental Evidence By Charles A. Holt; Andrew Kydd; Laura Razzolini; Roman Sheremeta
  16. A Partner in Crime: Assortative Matching and Bias in the Crime Market By Gavrilova, Evelina
  17. Opinion Dynamics and Wisdom under Conformity By Berno Buechel; Tim Hellmann; Stefan Kölßner
  18. Anonymous social influence By Manuel Foerster; Michel Grabisch; Agnieszka Rusinowska
  19. Strategy-proofness and single-peackedness in bounded distributive lattices By Ernesto Savaglio; Stefano Vannucci
  20. How to Efficiently Allocate Houses under Price Controls? By Andersson , Tommy; Yang , Zaifu; Zhang , Dongmo
  21. NIRA-GUI: A matlab application which solves for couple-constraint nash equibria from a symbolic specification By Krawczyk, Jacek B; Townsend, Wilbur
  22. Axiomatizing Multi-Prize Contests: A Perspective from Complete Ranking of Players By Jingfeng Lu; Zhewei Wang;
  23. Core and Coalitional Fairness: The Case of Information Sharing Rule By Bhowmik, Anuj
  24. Individual Search and Social Networks By Sanjeev Goyal; Stephanie Rosenkranz; Utz Weitzel; Vincent Buskens
  25. Measuring Power and Satisfaction in Societies with Opinion Leaders By René Van Den Brink; Agnieszka Rusinowska; Frank Steffen

  1. By: Ahmet Alkan (Sabanci University, Istanbul); Alparslan Tuncay (Sabanci University, Istanbul)
    Abstract: Pairing Games or Markets studied here are the non-two-sided NTU generalization of assignment games. We show that the Equilibrium Set is nonempty, that it is the set of stable allocations or the set of semistable allocations, and that it has several notable structural properties. We also introduce the solution concept of pseudostable allocations and show that they are in the Demand Bargaining Set. We give a dynamic Market Procedure that reaches the Equilibrium Set in a bounded number of steps. We use elementary tools of graph theory and a representation theorem obtained here.
    Keywords: Stable Matching, Competitive Equilibrium, Market Design, NTU Assignment Game, Roommate Problem, Coalition Formation, Bargaining Set, Bilateral Transaction, Gallai Edmonds Decomposition
    JEL: C71 C78
    Date: 2014–04
  2. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: In cooperative games, the core is the most popular solution concept, and its properties are well known. In the classical setting of cooperative games, it is generally assumed that all coalitions can form, i.e., they are all feasible. In many situations, this assumption is too strong and one has to deal with some unfeasible coalitions. Defining a game on a subcollection of the power set of the set of players has many implications on the mathematical structure of the core, depending on the precise structure of the subcollection of feasible coalitions. Many authors have contributed to this topic, and we give a unified view of these different results.
    Keywords: TU-game; Solution concept; Core; Feasible coalition; Communication graph; Partially ordered set
    Date: 2013
  3. By: Bajoori, Elnaz
    Date: 2013
  4. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Peter Sudhölter (University of Southern Denmark - Department of Business and Economics and COHERE)
    Abstract: A game with precedence constraints is a TU game with restricted cooperation, where the set of feasible coalitions is a distributive lattice, hence generated by a partial order on the set of players. Its core may be unbounded, and the bounded core, which is the union of all bounded faces of the core, proves to be a useful solution concept in the framework of games with precedence constraints. Replacing the inequalities that define the core by equations for a collection of coalitions results in a face of the core. A collection of coalitions is called normal if its resulting face is bounded. The bounded core is the union of all faces corresponding to minimal normal collections. We show that two faces corresponding to distinct normal collections may be distinct. Moreover, we prove that for superadditive games and convex games only intersecting and nested minimal collection, respectively, are necessary. Finally, it is shown that the faces corresponding to pairwise distinct nested normal collections may be pairwise distinct, and we provide a means to generate all such collections.
    Keywords: game theory; restricted cooperation; distributive lattice; core; extremal rays; faces of the core
    Date: 2014–06
  5. By: David Kelsey (Department of Economics, University of Exeter); Sara le Roux (Department of Economics, Oxford Brookes University)
    Abstract: We report an experimental test of the influence of ambiguity on behaviour in a coordination game. We study the behaviour of subjects in the presence of ambiguity and attempt to determine whether they prefer to choose an ambiguity safe option. We fi?nd that this strategy, which is not played in either Nash equilibrium or iterated dominance equilibrium, is indeed chosen quite frequently. This provides evidence that ambiguity aversion infl?uences behaviour in games. While the behaviour of the Row Player is consistent with randomising between her strategies, the Column Player shows a marked preference for avoiding ambiguity and choosing his ambiguity-safe strategy.
    Keywords: Ambiguity; Choquet expected utility; coordination game; Ellsberg urn, experimental economics.
    JEL: C72 C91 D03 D81
    Date: 2014
  6. By: Kenan Huremovic (Department of Economics, European University Institute, Italy)
    Abstract: Network structure has a significant role in determining the outcomes of many socioeconomic relationships, including the antagonistic ones. In this paper we study a situation in which agents, embedded in a network, simultaneously play interrelated bilateral contest games with their neighbors. Interrelatedness of contests induces complex local and global network effects. We first characterize the equilibrium of a game on an arbitrary fixed network. Then we study a dynamic network formation model, introducing a novel but intuitive link formation protocol. As links represent antagonistic relationships, link formation is unilateral while link destruction is bilateral. A complete k-partite network is the unique stable network topology. As a result, the model provides a micro-foundation for the structural balance concept in social psychology, and the main results go in line with theoretical and empirical findings from other disciplines, including international relations, sociology and biology.
    Keywords: Network Formation, Structural Balance, Contest
    JEL: D85 D74
    Date: 2014–04
  7. By: Péter Csóka (Department of Finance, Corvinus University of Budapest and “Momentum” Game Theory Research Group, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Hungary); P. Jean-Jacques Herings (Department of Economics, Maastricht University, The Netherlands)
    Abstract: Risk allocation games are cooperative games that are used to attribute the risk of a financial entity to its divisions. In this paper, we extend the literature on risk allocation games by incorporating liquidity considerations. A liquidity policy specifies state-dependent liquidity requirements that a portfolio should obey. To comply with the liquidity policy, a financial entity may have to liquidate part of its assets, which is costly. The definition of a risk allocation game under liquidity constraints is not straight- forward, since the presence of a liquidity policy leads to externalities. We argue that the standard worst case approach should not be used here and present an alternative definition. We show that the resulting class of transferable utility games coincides with the class of totally balanced games. It follows from our results that also when taking liquidity considerations into account there is always a stable way to allocate risk.
    Keywords: Market Microstructure, Coherent Measures of Risk, Market Liquidity, Portfolio Performance Evaluation, Risk Capital Allocation, Totally Balanced Games
    JEL: C71 G10
    Date: 2014–04
  8. By: Hurt, Wesley; Osorio, Antonio
    Abstract: In this paper we consider a sequential allocation problem with n individuals. The first individual can consume any amount of some endowment leaving the remaining for the second individual, and so on. Motivated by the limitations associated with the cooperative or non-cooperative solutions we propose a new approach. We establish some axioms that should be satisfied, representativeness, impartiality, etc. The result is a unique asymptotic allocation rule. It is shown for n=2,3,4, and a claim is made for general n. We show that it satisfies a set of desirable properties.
    Keywords: Sequential allocation rule, River sharing problem, Cooperative and non-cooperative games, Dictator and ultimatum games.
    JEL: C79 D63 D74
    Date: 2014–06–03
  9. By: Manuel Förster (CES, Université Paris 1 Panthéon-Sorbonne, France, and CORE, University of Louvain Louvain-la-Neuve, Belgium); Ana Mauleon (CEREC, Saint-Louis University, Brussels, CORE, University of Louvain, Louvain-la-Neuve, Belgium); Vincent J. Vannetelbosch (CORE, University of Louvain, Louvain-la-Neuve, CEREC, Saint-Louis University, Brussels, Belgium)
    Abstract: We investigate the role of manipulation in a model of opinion formation. Agents repeatedly communicate with their neighbors in the social network, can exert effort to manipulate the trust of others, and update their opinions about some common issue by taking weighted averages of neighbors' opinions. The incentives to manipulate are given by the agents' preferences. We show that manipulation can modify the trust structure and lead to a connected society. Manipulation fosters opinion leadership, but the manipulated agent may even gain influence on the long-run opinions. Finally, we investigate the tension between information aggregation and spread of misinformation.
    Keywords: Social networks, Trust, Manipulation, Opinion leadership, Consensus, Wisdom of Crowds
    JEL: D83 D85 Z13
    Date: 2014–04
  10. By: Dilger, Alexander
    Abstract: In traditional game theory, strategies are equivalent with actions and mixed strategies are the only extension. As a new extension, strategies are interpreted as plans. Although most plans are not very interesting (like doing a certain action), some conditional plans are. For example, they enable cooperation in the Prisoners' Dilemma. -- In der traditionellen Spieltheorie sind Strategien äquivalent mit Handlungen und gemischte Strategien die einzige Erweiterung dazu. Als eine neue Erweiterung werden Strategien als Pläne interpretiert. Obgleich die meisten Pläne nicht sehr interessant sind (wie eine bestimmte Handlung zu tun), sind manche bedingten Pläne es doch. So können sie beispielsweise Kooperation im Gefangenendilemma ermöglichen.
    JEL: C72 C70 D83
    Date: 2014
  11. By: Ulrich Faigle (Universität zu Köln - Mathematisches Institut); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The Shapley value is defined as the average marginal contribution of a player, taken over all possible ways to form the grand coalition $N$ when one starts from the empty coalition and adds players one by one. The authors have proposed in a previous paper an allocation scheme for a general model of coalition formation where the evolution of the coalition of active players is ruled by a Markov chain, and need not finish at the grand coalition. The aim of this note is to develop some explanations in the general context of time discrete stochastic processes, exhibit new properties of the model, correct some inaccuracies in the original paper, and give a new version of the axiomatization.
    Keywords: coalitional game; coalition formation process; Shapley value
    Date: 2013
  12. By: Marco Marinucci (Bank of Italy)
    Abstract: This paper provides theoretical background to the increasing R&D cooperation among firms and public research institutions. We find that R&D spillovers may impede cooperation among firms or research institutions even when the cost of forming a link is negligible. Further, the presence of heterogeneous players results in different concepts of network regularity but also increases the number of possible pairwise stable networks. Consequently, stronger concepts of stability are needed to study networks in which players are not homogeneous.
    Keywords: networks, innovation, R&D cooperation, spillovers
    JEL: C70 L14 O30
    Date: 2014–06
  13. By: Sofia Priazhkina (Department of Economics, Indiana University); Frank Page (Department of Economics, Indiana University)
    Abstract: This paper presents a model of collusive bargaining networks. Given a status quo network, game is played in two stages: in the first stage, pairs of sellers form the network by signing two-sided contracts that allow sellers to use connections of other sellers; in the second stage, sellers and buyers bargain for the product. We extend the notion of a pairwise Nash stability with transfers to pairwise Nash stability with contracts and characterize the subgame perfect equilibria. The equilibrium rents are determined for all firms based on their collateral and bargaining power. When a stable equilibrium exists, sharing always generates maximum social welfare and eliminates the frictions created by the network structure. The equilibria depend on the initial network setup, likewise bargaining and contractual procedures. In the homogeneous case, equilibria exist when the number of buyers and sellers are relatively unequal. When the number of buyers exceeds number of sellers, bargaining privileges of sellers over buyers and a low sharing transfer are required for the equilibrium to exist. In the networks with relatively few monopolized sellers, sharing leads to a complete reallocation of surplus to sellers and a zero sharing transfer. When the global market is dominated by sellers, surplus is divided relatively equitably. It is also shown that in the special case of the model with only one monopolistic seller and no market entry, the sharing process organizes sellers in the supply chain order.
    Keywords: Social Networks, Oligopoly Pricing, Collusion, Market Sharing Agreements
    JEL: L11 L14 L12
    Date: 2014–05
  14. By: David Gill; Victoria Prowse
    Abstract: In this paper we investigate how cognitive ability and character skills influence behavior, success and the evolution of play towards Nash equilibrium in repeated strategic interactions.� We study behavior in a p-beauty contest experiment and find striking differences according to cognitive ability: more cognitively able subjects choose numbers closer to equilibrium, converge more frequently to equilibrium play and earn more even as behavior approaches the equilibrium prediction.� To understand better how subjects with different cognitive abilities learn differently, we estimate a structural model of learning based on level-k reasoning.� We find a systematic positive relationship between cognitive ability and levels; furthermore, the average level of more cognitively able subjects responds positively to the cognitive ability of their opponents, while the average level of less cognitively able subjects does not respond.� Finally, we compare the influence of cognitive ability to that of character skills, and find that both cognition and personality affect behavior and learning.� More agreeable and emotionally stable subjects perform better and learn faster, although the effect of cognitive ability on behavior is stronger than that of character skills.
    Keywords: Cognitive ability, character skills, personality traits, level-k, bounded rationality, learning, convergence, non-equilbrium behavior, beauty contest, repeated games, structural modeling, theory of mind, intelligence, IQ, cognition, Raven test
    JEL: C92 C73 D83
    Date: 2014–06–12
  15. By: Charles A. Holt (University of Virginia); Andrew Kydd (University of Wisconsin); Laura Razzolini (Virginia Commonwealth University); Roman Sheremeta (Case Western Reserve University and the Economic Science Institute)
    Abstract: This paper implements an experimental test of a game-theoretic model of equilibrium profiling. Attackers choose a demographic “type” from which to recruit, and defenders choose which demographic types to search. Some types are more reliable than others in the sense of having a higher probability of carrying out a successful attack if they get past the security checkpoint. In a Nash equilibrium, defenders tend to profile by searching the more reliable attacker types more frequently, whereas the attackers tend to send less reliable types. Data from laboratory experiments with financially motivated human subjects are consistent with the qualitative patterns predicted by theory. However, we also find several interesting behavioral deviations from the theory.
    Keywords: terrorism, profiling, game theory, laboratory experiment
    JEL: C72 C91 J16
    Date: 2014
  16. By: Gavrilova, Evelina (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: I identify a discriminatory bias in partnership formation within the property crime market in the United States. Theoretically, the prisoner's dilemma creates an incentive for a criminal to form a partnership with a counterpart with the same probability of success, resulting in an equilibrium pattern of positive assortative matching. Using individual matched report-arrest data from the National Incident Based Reporting System and a novel empirical strategy, I pinpoint matches where the underlying probability of success of two partners differ. This difference in probability is correlated with observable characteristics, which could be evidence for discrimination and search frictions. I find patterns consistent with discrimination in male-female partnerships and patterns consistent with search frictions in black-white matches. In particular, females in a male-female partnership are more likely to evade law-enforcement than males, even though on average males are more successful as a group. This results is robust to controlling for the criminal earnings, individual criminal offenses and market characteristics. Furthermore, these patterns are found also in criminal groups of a size bigger than 2. The result could be either due to pre-crime marital matching or discrimination.
    Keywords: Organized Crime; Assortative Matching; Discrimination
    JEL: C78 J16 J71 K42
    Date: 2014–06–11
  17. By: Berno Buechel (Department of Economics, University of Hamburg); Tim Hellmann (Institute of Mathematical Economics, Bielefeld University); Stefan Kölßner (Statistics and Econometrics, Saarland University)
    Abstract: We study a dynamic model of opinion formation in social networks. In our model, boundedly rational agents update opinions by averaging over their neighbors' expressed opinions, but may misrepresent their own opinion by conforming or counter-conforming with their neighbors. We show that an agent's social influence on the long-run group opinion is increasing in network centrality and decreasing in conformity. Concerning efficiency of information aggregation or “wisdom" of the society, it turns out that misrepresentation of opinions need not undermine wisdom, but may even enhance it. Given the network, we provide the optimal distribution of conformity levels in the society and show which agents should be more conforming in order to increase wisdom.
    Keywords: Opinion Leadership, Wisdom Of Crowds, Consensus, Social Networks, Conformity, Eigenvector Centrality
    JEL: C72 D83 D85 Z13
    Date: 2014–05
  18. By: Manuel Foerster (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CORE - Center of Operation Research and Econometrics [Louvain] - Université Catholique de Louvain (UCL) - Belgique); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: We study a stochastic model of influence where agents have "yes" or "no" inclinations on some issue, and opinions may change due to mutual influence among the agents. Each agent independently aggregates the opinions of the other agents and possibly herself. We study influence processes modeled by ordered weighted averaging operators, which are anonymous: they only depend on how many agents share an opinion. For instance, this allows to study situations where the influence process is based on majorities, which are not covered by the classical approach of weighted averaging aggregation. We find a necessary and sufficient condition for convergence to consensus and characterize outcomes where the society ends up polarized. Our results can also be used to understand more general situations, where ordered weighted averages are only used to some extent. Furthermore, we apply our results to fuzzy linguistic quantifiers, i.e., expressions like "most" or "at least a few".
    Keywords: Influence; Anonymity; Ordered weighted averaging operator; Convergence; Consensus; Fuzzy linguistic quantifier
    Date: 2013
  19. By: Ernesto Savaglio; Stefano Vannucci
    Abstract: Two distinct specifications of single peakedness as currently met in the relevant literature are singled out and discussed. Then, it is shown that, under both of those specifications, a voting rule as defined on a bounded distributive lattice is strategy-proof on the set of all profiles of single peaked total preorders if and only if it can be represented as an iterated median of projections and constants, or equivalently as the behaviour of a certain median tree-automaton. The equivalence of individual and coalitional strategy-proofness that is known to hold for single peaked domains in bounded linear orders fails in such a general setting. A related impossibility result on anonymous coalitionally strategy-proof voting rules is also obtained.
    Date: 2014–06
  20. By: Andersson , Tommy (Department of Economics, Lund University); Yang , Zaifu (Department of Economics and Related Studies, University of York); Zhang , Dongmo (Intelligent Systems Laboratory, University of Western Sydney)
    Abstract: Price controls are used in many regulated markets and well recognized as the cause of market inefficiency. This paper examines a practical housing market in the presence of price controls and provides a solution to the problem of how houses should be efficiently allocated among agents through a system of prices. We demonstrate that the dynamic auction by Talman and Yang (2008) always finds a core allocation in finitely many iterations, thus resulting in a Pareto efficient outcome.
    Keywords: Ascending auction; assignment market; price control; Pareto efficiency; core
    JEL: C71 D44
    Date: 2014–06–13
  21. By: Krawczyk, Jacek B; Townsend, Wilbur
    Abstract: A powerful method for computing Nash equilibria in constrained, multi-player games is created when the relaxation algorithm and the Nikaido-Isoda function are used within a MATLAB application. This paper describes that application, which is able to solve static and open-loop dynamic games specifed symbolically.
    Keywords: Nikaido-Isoda function, Coupled constraints., MATLAB,
    Date: 2014
  22. By: Jingfeng Lu (Department of Economics, National University of Singapore); Zhewei Wang (School of Economics, Shandong University);
    Abstract: Multiple prizes are usually awarded in contests (e.g., internal promotions, school admissions, sports, etc), and players exert effort to increase their chances for winning a higher prize. A multi-prize contest model must provide each player's probabilities of winning each prize as functions of all players.efforts. This paper generalizes the ax-iomatization framework of Skaperdas (1996) and Clark and Riis (1998a) by considering the probabilities of complete rankings of players for their given efforts. Necessary and sufficient axioms are identi.ed to axiomatize the widely adopted multi-prize nested lottery contest of Clark and Riis (1996a), as well as its mirror image, the "reverse"nested lottery contests recently proposed by Fu, Lu and Wang (2014). The axioms of Skaperdas (1996) and Clark and Riis (1998a) need to be appropriately reformulated (and thus reinterpreted) from the ranking perspective. The axiomatization requires one new axiom of .Independence from Irrelevant Ranks.(IIR) if and only if the contest in- volves (strictly) more than three players. Our axiomatization framework integrates the single-prize and multi-prize lottery contest models, it also the conventional and reverse nested lottery contests and further illustrates their .mirror image.relationship.
    JEL: O11 N45
    Date: 2014–06
  23. By: Bhowmik, Anuj
    Abstract: We investigate two of the most extensively studied cooperative notions in a pure exchange economy with asymmetric information. One of them is the core and the other is known as coalitional fairness. The set of agents is modelled by a mixed market consisting of some large agents and an ocean of small agents; and the commodity space is an ordered Banach space whose positive cone has an interior point. The information system in our framework is the one introduced by Allen in [1]. Thus, the same agent can have common, private or pooled information when she becomes member of different coalitions. It is shown that the main results in Grodal [20], Schmeidler [26] and Vind [31] can be established when the economy consists of a continuum of small agents. We also focus on the information mechanism based on size of coalitions introduced in [18] and obtain a result similar to the main result in [18]. Finally, we examine the concept of coalitional fairness proposed in [21]. We prove that the core is contained in the set of coalitionally fair allocations under some assumptions. This result provides extensions of Theorem 2 in [21] to an economy with asymmetric information as well as a deterministic economy with infinitely many commodities. Although we consider a general commodity space, all our results were so far unsolved to the case of information sharing rule with finitely many commodities.
    Keywords: Asymmetric information economy; coalitional fairness; core; information sharing rule.
    JEL: D51 D82
    Date: 2014–06–13
  24. By: Sanjeev Goyal (Faculty of Economics and Christ's College, University of Cambridge); Stephanie Rosenkranz (Department of Economics, Utrecht University); Utz Weitzel (Department of Economics, Radboud University Nijmegen); Vincent Buskens (Department of Sociology, Utrecht University)
    Abstract: The explosion in online social networks motivates an enquiry into their structure and their welfare effects. A central feature of these networks is information sharing: online social networks lower the cost of getting information from others. These lower costs affect the attractiveness of individual search vis-a-vis a reliance on social networks. The paper reports the findings of an experiment on these effects. Our experiment shows that online networks can have large effects. Information acquisition is more dispersed and it is accompanied by denser social networks. Aggregate investment in information acquisition falls, but information available to individuals remains stable, due to increased networking. The overall effect is a significant increase in individual utility and aggregate welfare.
    Keywords: Social networks
    JEL: D83 D85
    Date: 2014–04
  25. By: René Van Den Brink (Department of Econometrics and Tinbergen Institute - VU University); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Frank Steffen (University of Liverpool Management School (ULMS) - University of Liverpool Management School)
    Abstract: Opinion leaders are actors who have some power over their followers as they are able to influence their followers' choice of action in certain instances. In van den Brink et al. (2011) we proposed a two-action model for societies with opinion leaders. We introduced a power and a satisfaction score and studied some common properties. In this paper we strengthen two of these properties and present two further properties, which allows us to axiomatize both scores for the case that followers require unanimous action inclinations of their opinion leaders to follow them independently from their own action inclinations.
    Keywords: Collective choice ; follower ; opinion leader ; power ; satisfaction ; axiomatization
    Date: 2013–09

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