Coordination and Evolutionary Network Formation with Asymmetric Link Costs: Part One

Fukuzumi, Masakazu

Coordination and Evolutionary Network Formation with Asymmetric Link Costs: Part One

Masakazu Fukuzumi
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Masakazu Fukuzumi: Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan

No 147, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: We analyze a dynamic implication of an evolutionary process in a population where both actions and network structures changes over time. At every period, a coordination game is played by players who are linked with each other. An asymmetric cost of a link is incorporated. Under this setting each player myopically adopts with its circumstance consisting of the network structure and the action profile. In a stochastically stable state there are link cost patterns such that all players play a pareto dominant equilibrium strategy of coordination game. This is the most different result from a standard stochastic evolutionary models that selects a risk dominant equilibrium.

Keywords: Network formation; Coordination game; Stochastic evolution; Asymmetric link cost; Pareto dominant equilibrium; Risk dominant equilibrium (search for similar items in EconPapers)
Pages: 26 pages
Date: 2003-12
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