Waiting for my neighbors

Pauli Murto and Sidartha Gordon
Authors registered in the RePEc Author Service: Emeric Henry

No 12834, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We introduce a neighborhood structure in waiting games where the players decide when to``stop" (exit a market, adopt a technology). The payoff of stopping increases each time a neighbor stops. We show that the dynamic evolution of the network starkly depends on initial parameters and can take the form of either a shrinking network, where players at the edges stop first, or a fragmenting network where interior players stop first making the network split up in smaller ones over time. We find that, in addition to the coordination inefficiency standard in waiting games, the neighbourhood structure gives rise to two other inefficiencies, the first linked to the order of exit and the second to the final distribution of remaining nodes. We consider subsidy programs aimed at correcting these inefficiencies.

Keywords: Waiting games; Networks; Inefficiencies (search for similar items in EconPapers)
JEL-codes: C73 D83 D85 (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-gth, nep-mic and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Waiting for my neighbors (2021)
Working Paper: Waiting for My Neighbors (2021)
Working Paper: Waiting for My Neighbors (2021)
Working Paper: Waiting for my Neighbors (2018)
Working Paper: Waiting for my Neighbors (2018)
Working Paper: Waiting for my Neighbors (2018)
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