Conversations among competitors
By: Jeremy C. Stein.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- no. 13370.; Working paper series (National Bureau of Economic Research) -- working paper no. 13370.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 38
Subjects: Diffusion of innovations -- Econometric models; Competition -- Econometric models; Business communication
Description: I develop a model of bilateral conversations in which players may honestly exchange ideas with their competitors. The key to incentive compatibility is a strong form of complementarity in the information structure: a player can only generate a useful new insight on a given topic if he has access to his counterpart's previous thoughts on the topic. I then embed this model into a linear social network in which player A first can have a conversation with player B, then player B can have a conversation with player C, and so on. I show that relatively underdeveloped ideas can travel long distances over the network and thus be shared by many agents. More valuable ideas, by contrast, tend to remain localized among small groups of agents.
Notes: "September 2007"

Includes bibliographical references (p. 36-37).

Also available in PDF from the NBER world wide web site (www.nber.org).