Dissemination in an endogenous random network (or “Follow the leader”)

An agent based model is developed in which leaders arise endogenously from a social network. Leaders are defined as early adopters of a subsequently popular product or trend. They become leaders by attracting a network of imitators. Agents seek to become leaders themselves, or to develop a direct link to a leader in order to increase the chance of becoming an early adopter in a social hierarchy. The environment is related to a majority game, but introduces the importance of the timing of adoption. A late adopter to a popular choice receives a low payoff. The proposed environment is relevant to a number of settings in which leadership and timing of decisions are important. A number of settings place importance on a reputation for being a trend setter. This includes retail outlets that market the image of carrying trend leading products or an individual promoter of trends or fashion who receives payments based on the ability to market items. It also applies to setting in which a cult-of-personality can dictate popular tastes, such as in art, food, and wine markets. A social hierarchy can also apply to the introduction of new products or ideas, such as academic research and financial market analysts. * 360 Dr. MLK Jr., Blvd. Newark, NJ 07102, [email protected]