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Nature Is Weird  /  Economics

A digital social network can be so powerful that a rational person will choose to stay even after they realize the platform is making them miserable.

Rational agents face a mathematical dilemma where the cost of being excluded from a group exceeds the personal harm of staying. This model explains why millions of people feel trapped by social media and marketplaces that they actively dislike. It is not a matter of weak willpower or addiction but a structural reality of how networks function. The platform effectively forces participation by making non-participation too expensive for the individual. Breaking away requires a collective exit that the system is designed to prevent. This mathematical trap means that personal choice is often an illusion in the digital age.

Original Paper

Platform Traps

Andrei Hagiu, Julian Wright

SSRN  ·  6642504

A novel feature of platforms such as marketplaces and social networks is that non-participants may become worse off as others join. We show that in such settings, rational agents can be induced to join the platform despite being better off without it-a phenomenon we call a platform trap. We provide a dynamic theory of how platform traps emerge through one or more of the following additional features: (i) the ability of the platform to make dynamic price adjustments; (ii) the interplay between on