The Impact of Connectivity on the Production and Diffusion of Knowledge

TL;DR

This paper examines how social network connectivity influences knowledge creation and spread, revealing that increased connectivity can hinder innovation and reduce overall social welfare due to reduced experimentation.

Contribution

It introduces a social bandit model showing the dual effects of connectivity on knowledge diffusion and production, highlighting potential negative impacts of excessive connectivity.

Findings

Higher connectivity improves knowledge diffusion

Greater connectivity can reduce knowledge production

Excessive connectivity may lead to homogeneity and lower social welfare

Abstract

We study a social bandit problem featuring production and diffusion of knowledge. While higher connectivity enhances knowledge diffusion, it may reduce knowledge production as agents shy away from experimentation with new ideas and free ride on the observation of other agents. As a result, under some conditions, greater connectivity can lead to homogeneity and lower social welfare.