Staudigl, Mathias and Weidenholzer, Simon (2014) 'Constrained interactions and social coordination.' Journal of Economic Theory, 152 (1). pp. 41-63. ISSN 0022-0531

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Abstract

We consider a co-evolutionary model of social coordination and network formation where agents may decide on an action in a 2 x 2 -coordination game and on whom to establish costly links to. We find that if agents may only support a limited number of links payoff dominant conventions will emerge in the long run, contrasting the case of unconstrained interactions where risk dominant conventions arise for a wide range of parameters. Under constrained iterations, already a small number of agents choosing the payoff dominant action enables agents – by linking up to those agents and choosing the payoff dominant action – to secure themselves the highest possible payoff. We extend our model by discussing constrained interactions in the context of general m x m games, convex payoff functions, heterogeneous constraints, and frictions in link formation.

Item Type:	Article
Uncontrolled Keywords:	Coordination games; Equilibrium selection; Learning; Network formation
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of
SWORD Depositor:	Elements
Depositing User:	Elements
Date Deposited:	14 Jan 2015 15:49
Last Modified:	15 Jan 2022 00:36
URI:	http://repository.essex.ac.uk/id/eprint/12316

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