Jiang, Ge and Weidenholzer, Simon (2017) Local interactions under switching costs. Economic Theory, 64 (3). pp. 571-588. DOI https://doi.org/10.1007/s00199-016-1002-3
Jiang, Ge and Weidenholzer, Simon (2017) Local interactions under switching costs. Economic Theory, 64 (3). pp. 571-588. DOI https://doi.org/10.1007/s00199-016-1002-3
Jiang, Ge and Weidenholzer, Simon (2017) Local interactions under switching costs. Economic Theory, 64 (3). pp. 571-588. DOI https://doi.org/10.1007/s00199-016-1002-3
Abstract
We study the impact of switching costs on the long-run outcome in 2×2 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 contain 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: | Article |
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Uncontrolled Keywords: | Switching costs; Local interactions; Learning; Coordination games |
Subjects: | H Social Sciences > HB Economic Theory |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 14 Oct 2016 14:50 |
Last Modified: | 30 Oct 2024 20:44 |
URI: | http://repository.essex.ac.uk/id/eprint/17770 |
Available files
Filename: GeWeREPOSITORY.pdf