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Constrained interactions and social coordination

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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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

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