Coordination in the El Farol Bar problem: The role of social preferences and social networks

Shu-Heng Chen and Umberto Gostoli

No 2013-20, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: In this paper, the authors continue the pursuit of the self-coordination mechanism as studied in the El Farol Bar problem. However, in addition to efficiency (the optimal use of the public facility), they are also interested in the distribution of the public resources among all agents. Hence, they introduce a two-dimensional El Farol Bar problem, to be distinguished from the early one-dimensional one, which has efficiency as the only concern. The authors ask whether it is possible to have self-coordinating solutions to the El Farol Bar problem so that the public resources can be optimally used with neither idle capacity nor incurring congestion and, in the meantime, the resources can be well distributed among all agents. They consider this ideal situation an El Farol version of a good society. This paper shows the existence of a positive answer to this inquiry, but it requires two elements, which were largely left out in the conventional literature on the El Farol Bar problem. These elements are social networks and social preferences. The authors first show, through cellular automata, that social networks can contribute to the emergence of a good society. They then show that the addition of some inequity-averse agents can even guarantee the emergence of the good society.

Keywords: El Farol Bar problem; social preferences; social networks; inequity aversion; cellular automata (search for similar items in EconPapers)
JEL-codes: B52 C63 C73 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-mic and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Coordination in the El Farol Bar problem: The role of social preferences and social networks (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201320

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