Abstract
This paper studies the value of network-based targeting within a class of network games with strategic complements, where the designer can target a group of seed players as first movers. We define an effectiveness index, called the relative network synergy equivalent (RNSE), to quantify the effect of a network-based targeting intervention relative to across-the-board peer effect enhancement. We show that, regardless of the targeting policies and network structures, a universal and tight upper bound for this index is 2≈1.414. This upper bound is robust to considerations of revenue maximization, costly seeding, random seeding as the alternative benchmark, and multiple stages of moves. Compared with network-based targeting, peer effect enhancing policy has the advantage of being agnostic to the network structure. In the case of small synergy, we provide comparative statics of the RNSE index concerning the network structures: fixing the targeting policy, increasing network links within the seeded group or the unseeded group will decrease the index; meanwhile, adding links across these two groups will increase the index. Our analysis sheds light on policy choices between network-based targeting and peer effect enhancing policies.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.