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The Cambridge-INET Institute - continuing as the Janeway Institute

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Choi, S., Goyal, S. and Moisan, F.

Connectors and Influencers

WP Number: 1909

Abstract: This paper reports an experiment on costly information purchase and link formation for information gathering. A `star' network with two information configurations is predicted - a pure influencer outcome in which the hub purchases information while all others free ride and a pure connector outcome in which the hub purchases no information and the peripheral players purchase information. The latter exists only for large groups and the former exists regardless of group size. We test these predictions on a new experimental platform with asynchronous activity in continuous time. Our experiments provide strong support for the predictions with evidence on the role of group size and payoff information. In large groups, the pure influencer outcome with excessive information purchase is prevalent when subjects only see their own payoffs, whereas the pure connector outcome becomes common when subjects see everyone's payoffs.

JEL Codes: C92 D83 D85 Z13

Author links: Sanjeev Goyal  

PDF: wp1909.pdf

Open Access Link: 10.17863/CAM.89400

Keynes Fund Project(s):
Experiments on Financial Networks (JHLB)  
Experiments on 'Networked Markets' (JHLR)  

Theme: networks