Knowledge sharing, heterophily, and social network dynamics

ABSTRACT This study formulates a model where (i) players are characterized by a knowledge set that changes endogenously by communication and (ii) some players have homophily preferences, while others have heterophily preferences. The study thus demonstrates that heterophilous players bridge different components and extend networks in an early stage and, subsequently, homophilous players take the role of a network hub that maintains network ties. It also illustrates the long-run knowledge distribution. Further, the model is embedded with new structural components that illustrate the strength of weak ties and the small-world phenomenon.