NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia

Vivi Alatas, Abhijit Banerjee, Arun G. Chandrasekhar, Rema Hanna, Benjamin A. Olken

NBER Working Paper No. 18351
Issued in August 2012
NBER Program(s):   PE   POL

We use unique data from 600 Indonesian communities on what individuals know about the poverty status of others to study how network structure influences information aggregation. We develop a model of semi-Bayesian learning on networks, which we structurally estimate using within-village data. The model generates qualitative predictions about how cross-village patterns of learning relate to different network structures, which we show are borne out in the data. We apply our findings to a community-based targeting program, where villagers chose which households should receive aid, and show that networks the model predicts to be more diffusive differentially benefit from community targeting.

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A data appendix is available at http://www.nber.org/data-appendix/w18351

This paper was revised on May 30, 2014

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w18351

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