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Targeting in social networks with anonymized information

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Document pages: 38 pages

Abstract: This paper studies whether a planner who only has information about thenetwork topology can discriminate among agents according to their networkposition. The planner proposes a simple menu of contracts, one for eachlocation, in order to maximize total welfare, and agents choose among the menu.This mechanism is immune to deviations by single agents, and to deviations bygroups of agents of sizes 2, 3 and 4 if side-payments are ruled out. However,if compensations are allowed, groups of agents may have an incentive to jointlydeviate from the optimal contract in order to exploit other agents. We identifynetwork topologies for which the optimal contract is group incentive compatiblewith transfers: undirected networks and regular oriented trees, and networktopologies for which the planner must assign uniform quantities: single rootand nested neighborhoods directed networks.

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