Research Repository

Local Interactions under Switching Costs

Jiang, Ge and Weidenholzer, Simon Local Interactions under Switching Costs. [UNSPECIFIED]

[img]
Preview
Text
GeWeREPOSITORY.pdf

Download (319kB) | Preview

Abstract

We study the impact of switching costs on the long run outcome in 2x2 coordination games played in the circular city model of local interactions. For low levels of switching costs the predictions are in line with the previous literature and the risk dominant convention is the unique long run equilibrium. For intermediate levels of switching costs the set of long run equilibria still contains the risk dominant convention but may also contain conventions that are not risk dominant. The set of long run equilibria may further be non-monotonic in the level of switching costs, i.e. as switching costs increase the prediction that the risk dominant convention is the unique long run equilibrium and the prediction that both conventions are long run equilibria alternate. Finally, for high levels of switching costs also non-monomorphic states will be included in the set of long run equilibria.

Item Type: UNSPECIFIED
Uncontrolled Keywords: HB;
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 14 Oct 2016 14:50
Last Modified: 17 Aug 2017 17:23
URI: http://repository.essex.ac.uk/id/eprint/17770

Actions (login required)

View Item View Item