Diffusion Games
American Economic Review
vol. 110,
no. 1, January 2020
(pp. 225-70)
Abstract
Behaviors and information often spread via person-to-person diffusion. This paper highlights how diffusion processes can facilitate coordination. I study contagion in a discrete network with Bayesian players. In addition to characterizing the extent and rate of adoption, we uncover a new effect: when large cascades are possible in equilibrium, exposure conveys information about a player's network position. This effect underscores a novel trade-off in the design of marketing campaigns, suggesting conditions under which word-of-mouth is relatively more effective. A generalization of the model to multi-type networks suggests a new approach to targeted seeding.Citation
Sadler, Evan. 2020. "Diffusion Games." American Economic Review, 110 (1): 225-70. DOI: 10.1257/aer.20180601Additional Materials
JEL Classification
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D85 Network Formation and Analysis: Theory
- M31 Marketing
- M37 Advertising
- Z13 Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification