Goyal, S., Rosenkranz, S., Weitze, U. and Buskens, V.

Information Acquisition and Exchange in Social Networks

WP Number: 1523

Abstract: A central feature of social networks is information sharing. The Internet and related computing technologies define the relative costs of private information acquisition and forming links with others. This paper presents an experiment on the effects of changing costs.We find that a decline in relative costs of linking makes private investments more dispersed and gives rise to denser social networks. Aggregate investment falls, but individuals access to investment remains stable, due to increased networking. The overall effect is a significant increase in individual utility and aggregate welfare.

Author links: Sanjeev Goyal  

PDF: wp1523.pdf

Open Access Link: 10.17863/CAM.5699

Theme: networks

Published Version of Paper: Information Acquisition and Exchange in Social Networks, Goyal, S., Rosenkranz, S., Weitzel, U. and Buskens, V., The Economic Journal (2017)