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Knowledge, Beliefs and Economics

Edited by Richard Arena and Agnès Festré

This book surveys how economists engage with knowledge and beliefs in various fields of economic analysis, such as general equilibrium theory, decision theory, game theory, experimental economics, evolutionary theory of the firm, financial markets and the history of economic thought.
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Chapter 11: Consumer Communities, Self-organization and Beliefs

Stéphane Ngo-Maï and Alain Raybaut


Stéphane Ngo-Maï and Alain Raybaut 11.1 INTRODUCTION The diffusion of Information and Communication Technology (ICT) in our economies has led to a vast increase in the number of electronic social and information good exchanges. The economic consequences of this phenomenon remain unclear.1 Electronic markets could lead to an increase in competition thanks to a decrease in search and transaction costs, a reduction in informational asymmetries and an improved understanding of economic fundamentals. In this sense, one could reasonably expect the market mechanism to perform better overall. However, a closer look at electronic technologies, goods and behaviour reveals a strong departure from the standard competitive hypothesis. Non-rival goods, for instance, can lead to zero or very low marginal cost production, which, in turn, leads to very specific types of economic behaviour. This gives rise to complex market structures in which imperfect competition could be understood not as a sign of inefficiency but instead as a compromise between co-ordination and market power.2 Although some researchers have focused on the economic consequences of the emergence of electronic markets, it is generally true that their attention has been restricted to price and quantity interactions and, in particular, to the study of the supply side of the market. In this chapter, we argue that the increased social interaction that has followed the development of ICT (and particularly the internet) has given rise to strong positive feedback effects on the demand side, where collective beliefs and imitative behaviour play a major role in...

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