On the economy of web links: Simulating the exchange process

TL;DR

This paper models the web link economy as a market where rational agents buy and sell links, revealing that high exchange activity can lead to a winner-takes-all outcome in the web ecosystem.

Contribution

It introduces a simple simulation model of link exchange among rational agents, analyzing its micro- and macroeconomic effects on the web community.

Findings

High link exchange leads to winner-takes-all dynamics

Simulation shows consistent economic behavior among agents

Link economy extremes intensify inequality

Abstract

In the modern web economy hyperlinks have already attained monetary value as incoming links to a web site can increase its visibility on major search engines. Thus links can be viewed as investment instruments that can be the subject of an exchange process. In this study we build a simple model performed by rational agents, whereby links can be bought and sold. Through simulation we achieve consistent economic behaviour of the artificial web community and provide analysis of its micro- and macro-level parameters. In our simulations we take the link economy to its extreme, where a significant number of links are exchanged, concluding that it will lead to a winner take all situation.