Regime Change in Large Information Networks

Pau Milán and Joan de Martí
Authors registered in the RePEc Author Service: Joan de Martí Beltran

No 1049, Working Papers from Barcelona School of Economics

Abstract: We study global games of regime change within networks of truthful communication. Agents can choose between attacking and not attacking a status quo, whose strength is unknown. Players share private signals on this state of the world with their immediate neighbors. Communication with neighboring players introduces local correlations in posterior beliefs and also allows for the pooling of information. In order to isolate the latter effect, we provide, as a methodological contribution, sparseness conditions on networks that allow for asymptotic approximations that eliminate covariances from equilibrium strategies. We ask how changes in the distribution of connectivities in the population affect the types of coordination in equilibrium as well as the likelihood of successful rally. We find that without a public signal strategic incentives align, and the probability of success remains independent of the type of network. With a public signal the distribution of degrees unambiguously affects the probability of success, although the direction of change is not monotone, and depends crucially on the cost of attack.

Keywords: networks; communication; global games; regime change; revolutions (search for similar items in EconPapers)
JEL-codes: D74 D82 D83 D85 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-gth and nep-net
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Journal Article: Regime change in large information networks (2019)
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