Di¤usion, Strategic Interaction, and Social Structure

How we act, as well as how we are acted upon, are to a large extent in‡uenced by our relatives, friends and acquaintances. This is true of which profession we decide to pursue, whether or not we adopt a new technology, as well as whether or not we catch the ‡u. In this chapter we provide an overview of research that examines how social structure impacts economic decision making and the di¤usion of innovations, behaviors and information. We begin with a brief overview of some of the stylized facts on the role of social structure on di¤usion in di¤erent realms. This is a rich area of study that includes a vast set of case studies, as well as some important regularities. With that empirical perspective, we then discuss insights from the epidemiology and random graph literatures that help shed light on the spread of infections throughout a society. Contagion of this form can be thought of as a basic, but important, form of social interaction, where the social structure largely determines patterns of di¤usion. This literature presents a rich understanding of questions such as: “How densely connected does a society have to be in order to have an infection reach a nontrivial fraction of its members?”, “How does this depend on the infectiousness of the disease?”, “How does it depend on the particulars of the social network in place?”, Department of Economics, Stanford University, Stanford CA 94305, USA. http://www.stanford.edu/ jacksonm e-mail: jacksonm@stanford.edu yDivision of the Humanities and Social Sciences, Caltech, Pasadena, CA 91125. http://www.hss.caltech.edu/~lyariv/index.htm e-mail: lyariv@hss.caltech.edu