Document Type
Working Paper
Date of This Version
8-1-2014
Abstract
This paper offers an information-based model of social interaction, and analyzes optimal investment and pricing of services that facilitate interaction in a duopoly. Agents have uncertainty over their preferences but are aware that they are correlated with others’, so there exists an incentive to communicate with others in the population. When a firm’s good can be bundled with a coordination mechanism for its consumers, its value is endogenously determined due to a consumption externality. Although this mechanism increases total surplus, it is underprovided and consumer surplus decreases.
Working Paper Number
1405
Recommended Citation
Hsiaw, Alice, "Learning Tastes Through Social Interaction" (2014). Economics Department Working Papers. Paper 165.
https://crossworks.holycross.edu/econ_working_papers/165
Published Version
This article was published as: Hsiaw, A. (2014). Learning Tastes Through Social Interaction. Journal of Economic Behavior & Organization, 107(PA), 64-85.
Comments
Published as Hsiaw, Alice, 2014. "Learning tastes through social interaction," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 64-85.