Economics at your fingertips  

Competing Conventions with Costly Information Acquisition

Roberto Rozzi ()
Additional contact information
Roberto Rozzi: Department of Economics, Ca’ Foscari University of Venice, Dorsoduro 3246, 30123 Venice, Italy

Games, 2021, vol. 12, issue 3, 1-29

Abstract: We consider an evolutionary model of social coordination in a 2 × 2 game where two groups of players prefer to coordinate on different actions. Players can pay a cost to learn their opponent’s group: if they pay it, they can condition their actions concerning the groups. We assess the stability of outcomes in the long run using stochastic stability analysis. We find that three elements matter for the equilibrium selection: the group size, the strength of preferences, and the information’s cost. If the cost is too high, players never learn the group of their opponents in the long run. If one group is stronger in preferences for its favorite action than the other, or its size is sufficiently large compared to the other group, every player plays that group’s favorite action. If both groups are strong enough in preferences, or if none of the groups’ sizes is large enough, players play their favorite actions and miscoordinate in inter-group interactions. Lower levels of the cost favor coordination. Indeed, when the cost is low, in inside-group interactions, players always coordinate on their favorite action, while in inter-group interactions, they coordinate on the favorite action of the group that is stronger in preferences or large enough.

Keywords: coordination; conventions; evolution; stochastic stability; costly information acquisition (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) (application/pdf) (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Games is currently edited by Ms. Debby Peng

More articles in Games from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().

Page updated 2022-08-04
Handle: RePEc:gam:jgames:v:12:y:2021:i:3:p:53-:d:582053