Random utility coordination games on networks

Marcin Pęski ()
Additional contact information
Marcin Pęski: Department of Economics, University of Toronto

Theoretical Economics, Forthcoming

Abstract: Abstract. We study static binary coordination games with random utility played on networks. In equilibrium, each agent chooses an action only if a fraction of her neighbors choosing the same action is higher than an agent-specific i.i.d. threshold. A fuzzy convention x is a profile where (almost) all agents choose the high action if their threshold is smaller than x and the low action otherwise. The random-utility (RU) dominant outcome x^{*} is a maximizer of an integral of the distribution of thresholds. The definition generalizes Harsanyi-Selten's risk dominance to coordination games with random utility. We show that, on each sufficiently large and fine network, there is an equilibrium that is a fuzzy convention x^{*}. On some networks, including a city network, all equilibria are fuzzy conventions x^{*}. Finally, fuzzy conventions x^{*} are the only behavior that is robust to misspecification of the network structure.

Keywords: Random utility; coordination games; networks (search for similar items in EconPapers)
JEL-codes: C7 (search for similar items in EconPapers)
Date: 2024-10-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://econtheory.org/ojs/index.php/te/article/viewForthcomingFile/5653/40358/1 Working paper version. Paper will be copyedited and typeset before publication. (application/pdf)

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: https://EconPapers.repec.org/RePEc:the:publsh:5653

Access Statistics for this article

Theoretical Economics is currently edited by Simon Board, Federico Echenique, Todd D. Sarver, Juuso Toikka, Rakesh Vohra, Pierre-Olivier Weill

More articles in Theoretical Economics from Econometric Society
Bibliographic data for series maintained by Martin J. Osborne ().