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Applied and bridge studies study record
Finance, money & marketsThe Cognitive-Network Welfare Theorem: Structural Holes, Cognitive Bias, and the Systemic Cost of Network-Enabled Deception
STATUS · Manuscript in progressSSRN · Not yet posted
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Contribution — what this adds to the conversation
The paper contributes a formal theorem, three mechanisms, and empirical case studies, bridging network sociology and behavioral economics. It honors both Burt and Kahneman by completing their programs' welfare and network dimensions.
WHAT'S NEW · The Cognitive-Network Welfare Theorem is novel, formally deriving the superadditive interaction between structural-hole brokerage and cognitive bias. The three amplification mechanisms are original contributions.
The paper establishes the Cognitive-Network Welfare Theorem, showing that when a network broker exploits cognitive biases (e.g., loss aversion, WYSIATI) of bridged parties, the welfare loss exceeds the sum of pure brokerage and pure bias losses. Three amplification mechanisms are identified, and case studies from credit rating agencies, social media, and pharmacy benefit managers illustrate the result.