Coordination through platforms

• Department of Economics

This event features a discussion with Penélope Hernández (Universitat de Valencia).

We study how platforms influence collective action by strategically designing information networks when users face fundamental coordination trade-offs. Each user seeks to align their action both with their private type and with the actions of others, creating tension between individual consistency and social coordination. In a Bayesian game where users receive private signals that are correlated with both their types and a payoff-relevant state, the platform controls which signals each user observes, thereby shaping beliefs and equilibrium behavior. We characterise the unique equilibrium and establish that platforms can induce any target collective action by manipulating network structure, bounded by two extremes that connect either all high-type or all low-type users to everyone. Multiple networks may be platform-equivalent, achieving identical aggregate outcomes through different architectures. We identify three fundamental tensions in optimal design. The complete network maximises social welfare but may not serve platform objectives; the complete and empty networks generate identical collective action under balanced type distributions despite vastly different information sharing; and networks that maximise heterophilic density need not align with either welfare or platform goals. Our policy analysis characterises conditions under which regulation can improve welfare without disrupting platform objectives, offering guidance for policymakers navigating information design in digital platforms.

Co-author: Julian Chitiva