The business model of companies such as Facebook, MySpace, and Twitter, relies on monetizing the information on the interactions and influences of their users. How valuable is such information, and is its use beneficial or detrimental for consumer welfare? We study these questions in a model...

We study the incentives of a digital business to collect and protect users' information. The information the business collects improves the service it provides to consumers, but it may also be accessed, at a cost, by strategic third parties in a way that harms users, imposing privacy costs. We...

I study a one-way flow connections model in which players are heterogeneous with respect to values and the costs of establishing a link. I first show that values and costs asymmetries are crucial in determining the level of connectedness of a network. Interestingly, unconnected equilibria are...

A fundamental question in social sciences is how trust emerges. We provide an answer which relies on the formation of social and economic relationships. We argue that behind trust lies the fact that individuals invest in connections taking into account the potential externalities networks...

This paper studies network formation in settings where players are heterogeneous with respect to benefits as well as the costs of forming links. Our results demonstrate that centrality, center-sponsorship and short network diameter are robust features of equilibrium networks. We find that in a...