Influencing the influencers: A theory of strategic diffusion

Andrea Galeotti, Sanjeev Goyal

Research output: Contribution to journalArticlepeer-review

Abstract

The growth of the Internet and assorted technologies has made it possible to collect and process detailed information on social networks. This article investigates how firms (and governments) can harness the power of social networks to promote their goals. We show that the optimal use of social networks leads to higher sales and greater profits. However, an increase in the level and dispersion of social interaction can increase or decrease the optimal influence strategy and profits of the player, depending on the content of the interaction. Optimal influence strategies will target individuals with low or high connections, depending on the content of interaction. Finally, the returns to investing in market research on social networks are greater in more unequal networks.

Original languageEnglish (US)
Pages (from-to)509-532
Number of pages24
JournalRAND Journal of Economics
Volume40
Issue number3
DOIs
StatePublished - 2009

ASJC Scopus subject areas

  • Economics and Econometrics

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