This paper studies a connections model of network formation in which players are heterogeneous with respect to values as well as the cost of forming links. We start by showing that value heterogeneity is important in determining the level of connectedness of a network, while cost heterogeneity...

The law of the few refers to the following empirical phenomenon: in social groups a very small subset of individuals invests in collecting information while the rest of the group invests in forming connections with this select few. In many instances, there are no observable differences in...

We study the problem of a firm M which wishes to inform a community of individuals about its product. Information travels within the community because of the social interactions between individuals. Our interest is in understanding how the firm can incorporate the network of social interactions...

This paper considers a game played among players who seek to extract payoffs from a group of individuals subject to local interaction effects. We are interested in the relation between the network of social interaction and equilibrium actions and payoffs. We start with an analysis of two...

The important role of friends, neighbors and colleagues in shaping individual choices has been brought out in a number of studies over the years. The presence of significant 'local' influence in shaping individual behavior suggests that firms, governments and developmental agencies should...

We study an incomplete-information model of sequential bargaining for a single object, with the novel feature that agents are located in a network. In each round of trade, the current owner of the object either consumes it or makes a take-it-or-leave-it offer to some connected trader. Traders...

We investigate the effects of a class of trading protocols on the architecture and efficiency properties of endogenously formed trading networks. In our model, the opportunity to sell valuable objects occurs randomly to different individuals. A sale can only be realized if two individuals are...

We study observational learning in environments with congestion costs: as more of one's predecessors choose an action, the payoff from choosing that action decreases. If congestion on either action can get so large that an agent would prefer to take the other action no matter his beliefs about...

We consider the spread of a harmful state through a population that is divided into two groups. The groups interact with each other to an extent that is parameterized, capturing the full spectrum from perfectly positive to perfectly negative assortativity. We first consider a central planner who...

We introduce a tractable model of cheap talk among players located on networks. In our model, a player can send a message to another player if and only if he is linked to him. We derive a sharp equilibrium and welfare characterization which reveals two basic insights. In equilibrium, the...