Innovation Adoption and Collective Experimentation∗

I study a game in which individuals gather costly information about an innovation and share their knowledge through social ties. A person’s incentive to experiment varies with her position in the network, and strategic interactions lead to counterintuitive behavior among the most connected players. The structure of the social network and the distribution of initial beliefs jointly determine long-run adoption behavior in the broader group. Networks that share information efficiently converge on a decision more quickly but are more prone to errors. Consequently, dense or centralized networks can have more volatile outcomes in the long run, and efforts to seed adoption in the network should focus on individuals who are isolated from one another.