Dynamic coordination with network externalites: procrastination can be efficient

Deivis Angeli

No 481, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil)

Abstract: I analyze a dynamic coordination model under quasi-hyperbolic discounting. The main result is that present bias can induce a society to coordinate efficiently. When considering a transition from network A to B, higher present bias induces individuals to ask for higher relative quality of B, which is also what the central planner dictates, but for different reasons. A present biased agent overvalues relative quality because, when considering whether to initiate a transition, her momentary loss of network externalities is overvalued by myopic discounting. The planner’s motives are the negative externalities inflicted on agents 'stuck' in A during a transition.

Date: 2018-08
New Economics Papers: this item is included in nep-mic
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://repositorio.fgv.br/bitstreams/6b5a3772-5d0 ... d101abb010f/download (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fgv:eesptd:481

Access Statistics for this paper

More papers in Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil) Contact information at EDIRC.
Bibliographic data for series maintained by Núcleo de Computação da FGV EPGE ().