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Braess’ Paradox Applied to Social Network Marketing

Network structure and the phenomena that explain it are seemingly ubiquitous, and the behaviors defined in Braess’ Paradox are no exception. In their 2018 paper “Paradoxes in Social Networks with Multiple Products, ” Krzysztof Apt, Evangelos Markakis, and Sunil Simon examine the efficiency of product marketing within social networks, finding direct application of the well-known Braess’ paradox. As typically referenced and as discussed in the course, Braess’ statement posits that adding an additional road to a traffic network may leave all network participants worse off than before. Relating this to the social network marketplace, Apt et al. explain that providing a node with too many choices can ultimately leave the entire network worse off.  In addition, they prove the dual of this notion, demonstrating that everyone in the network is better off when choice is diminished. Such findings are mathematically derived, wherein Apt et al. demonstrate the addition of products disrupting existing Nash equilibria. This, as discussed in class, points to the disintegration of a shared best response. Continuing to add products was found to ultimately reduce everyone’s payoff, while reducing products was found to eventually increase payoffs. 

In addition to Braess’ Paradox, freedom-of-choice paradox also plays a role in this outcome. This paradox claims that the more options an individual has, the greater possibility he/she has of experiencing conflict. In fact, the findings point to there being a certain “point where more options, products, and choices hurt both the seller and the consumer.” 

Like Braess’ Paradox itself, these findings initially seem counterintuitive. The notion of “choice” seems firmly positive from a consumer’s perspective, just as the ability to take an additional path between nodes A and B seems plainly beneficial from a commuter’s perspective. However, like many of the phenomena already discussed in the course, the basis for this aspect of network behavior is rooted in fundamental patterns of human behavior. Overwhelmed with options, consumers are easily daunted and overstimulated; in this case, we either tend towards indecision or non-optimal decision. This reaction diminishes marketing success and consumer satisfaction, which Apt et al. prove undermines the outcomes of the network overall.

These findings also offer valuable insight on the growing trend of marketing through online social networks. Instagram, Facebook, and Snapchat are still fairly new platforms for product diffusion; however, social media’s not-so-gradual transition into a vast, WiFi-enabled marketplace seems inevitable. Moreover, as these technologies claim an increasingly significant fraction of our attention, such marketing can only be expected to become more sophisticated. In the face of online social networks’ inundating recommendations, advertisements, and endless successions of links, Apt et al.’s findings provide a basis for a more nuanced marketing approach. Their paper speaks to the possibility of a more efficient form of commerce that serves to drive producer profits while also satisfying consumer desires. By leveraging network theory in such a way, social media has the potential to be the source of considerable innovation in marketing, advertisement, and business.

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