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Open AccessArticle

On Information Aggregation and Interim Efficiency in Networks

División de Economía, Centro de Investigación y Docencia Económicas (CIDE), Mexico City 01210, Mexico
Academic Editor: Christos Dimitrakakis
Games 2017, 8(1), 15;
Received: 31 October 2016 / Revised: 23 January 2017 / Accepted: 21 February 2017 / Published: 24 February 2017
(This article belongs to the Special Issue Decision Making for Network Security and Privacy)
This paper considers a population of agents that are engaged in a listening network. The agents wish to match their actions to the true value of some uncertain (exogenous) parameter and to the actions of the other agents. Each agent begins with some initial information about the parameter and, in addition, is able to receive further information from their neighbors in the network. I derive a closed expression for the (interim) social welfare loss that depends on the initial information structure and on the possible pieces of information that can be gathered under the network. Then, I explore how changes in the network may affect social welfare for extreme levels of complementarity in the agents’ actions. When the level of complementarity is very high, efficiency is achieved regardless of the network structure. For very low levels of complementarity in actions, efficiency can be either associated to more sparse or denser networks, depending on the size of the induced informative gains. The implications of this paper are relevant in security environments where agents are naturally interpreted as analysts who try to forecast the value of a parameter that describes a threat to security. View Full-Text
Keywords: networks; information aggregation; beauty-contests; strategic complementarity; social welfare networks; information aggregation; beauty-contests; strategic complementarity; social welfare
MDPI and ACS Style

Jimenez-Martinez, A. On Information Aggregation and Interim Efficiency in Networks. Games 2017, 8, 15.

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