Linking friction, social coordination and the speed of evolution

Zhiwei Cui

Games and Economic Behavior, 2023, vol. 140, issue C, 410-430

Abstract: We consider a model of social coordination and network formation where agents decide on an action in a coordination game and on whom to form costly links with. We explore the role of linking friction, where an agent cannot change all of her links simultaneously when choosing an alternative linking decision. Given linking friction, interaction structures are not fully flexible. We introduce a new solution concept of static equilibria, local Nash equilibria, and find that the set of local Nash equilibria may include action-heterogenous strategy profiles. Furthermore, risk-dominant strategy profiles are stochastically stable when linking friction is restrictive, and payoff-dominant strategy profiles are stochastically stable when linking friction becomes less restrictive. More importantly, linking friction can greatly accelerate the emergence of payoff-dominant strategy profiles.

Keywords: Social coordination; Network formation; Learning; Linking friction; Waiting time (search for similar items in EconPapers)
JEL-codes: C72 D83 D85 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:140:y:2023:i:c:p:410-430

DOI: 10.1016/j.geb.2023.04.011

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