Naive Learning and Game Play in a Dual Social Network Framework

Zhengzheng Pan and Robert Gilles

No 10-01, Economics Working Papers from Queen's Management School, Queen's University Belfast

Abstract: We observe that people perform economic activities within the social setting of a small group, while they obtain relevant information from a broader source. We capture this feature with a dynamic interaction model based on two separate social networks. Individuals play a coordination game in an interaction network. Meanwhile, all individuals update their strategies via a naive learning process using information from a separate influence network through which information is disseminated. In each time period, the interaction and influence networks co-evolve, and the individuals’ strategies are updated through a modified French-DeGroot updating process. We show that through this updating process both network structures and players’ mixed strategies always reach a steady state. In particular, conformity occurs in the long run when the interaction cost is sufficiently low. We also analyse the influence exerted by a minority group on these outcomes.

Keywords: Social learning; Social network; Diffusion; Coordination game (search for similar items in EconPapers)
JEL-codes: A14 C61 D70 D83 D85 L14 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2010-01
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