Social Connectedness and Local Contagion

Abstract We study a coordination game among agents in network. The choose whether to take action (e.g. adopting new technology) an uncertain environment that yields increasing value the actions of neighbours. develop algorithm fully partitions network into communities (coordination sets) within which have same propensity adopt. Our main finding is novel measure connectedness, we term “social connectedness,” determines adopt for each agent. Social connectedness captures both number links agent has her community (interconnectedness) as well she with members other who higher (embeddedness). There single set if and only balanced—that is, average degree subnetwork no larger than Finally, demonstrate contagion localized sets, such shock uniformly affects this all but impact on