Local information hinders coordination in endogenous networks

Feifei Lu

Economics Letters, 2023, vol. 223, issue C

Abstract: We model economic coordination as a minimum-effort game played repeatedly on a network, with endogenous partner selection (network formation). Coordination on the high-effort equilibrium is achieved under global information provided the population size is large enough. In contrast, under local information, agents are too conservative when choosing unknown partners and the low-effort equilibrium prevails.

Keywords: Minimum-effort games; Network formation; Equilibrium selection; Local information (search for similar items in EconPapers)
JEL-codes: C72 C73 D83 D85 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:223:y:2023:i:c:s0165176523000216

DOI: 10.1016/j.econlet.2023.110996

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