Social Coordination and Network Formation in Bipartite Networks

Jiang Ge ()
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Jiang Ge: Economics, Nanjing University, 22 Hankou Rd., Nanjing, 210093, China

The B.E. Journal of Theoretical Economics, 2021, vol. 21, issue 1, 239-268

Abstract: In this paper, we consider a model of social coordination and network formation, where players of two groups play a 2 × 2 coordination game when they are connected. Players in one group actively decide on whom they play with and on the action in the game, while players in the other group decide on the action in the game only and passively accept all the connections from the active group. The players in the active group can connect to a limited number of opponents in the other group. We find that the selection of long-run outcomes is determined by the population size of each group, not the overall population size of them. If either group’s population size is small in comparison to the number of maximally allowed links, all players will choose the risk-dominant equilibrium, while when both groups are sufficiently large with respect to the number of maximally allowed links, the players of the two groups will coordinate on the payoff-dominant action.

Keywords: coordination games; network formation; equilibrium selection; bipartite network (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/bejte-2019-0044

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