More neighbors, more efficiency

Zhiwei Cui

Journal of Economic Dynamics and Control, 2014, vol. 40, issue C, 103-115

Abstract: This paper considers a finite population of agents located within an arbitrary fixed network. Every agent plays a coordination game with his neighbors. If one neighbor's payoff from a specific interaction exceeds his average payoff per interaction, the neighbor is perceived as better performing. Over time agents imitate the strategies of their better performing neighbors; occasionally they make mistakes. Sufficient conditions for emergence of Pareto efficient and risk dominant conventions are provided. The paper also illustrates the main results through relevant examples.

Keywords: Local interaction; Coordination game; Imitation; Contagion (search for similar items in EconPapers)
JEL-codes: C72 D83 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:40:y:2014:i:c:p:103-115

DOI: 10.1016/j.jedc.2013.12.012

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