Social preferences on networks
Sarah Rezaei and
VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association
We develop a model of social preferences for network games and study its predictions in a local public goods game with multiple equilibria. The key feature is that players' social preferences are heterogeneous. This gives room for disagreement between players about the "right" payoff ordering. When preferences are compatible, however, players coordinate on a refined equilibrium set. How easily the requirements for preference compatibility are met crucially depends on a property of the network structure: neighborhood nestedness. This means that equilibrium selection succeeds in small, connected structures but also in centralized networks. All predictions are confirmed in an experiment.
Keywords: social preferences; network games; equilibrium selection (search for similar items in EconPapers)
JEL-codes: C70 C91 D85 H41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc21:242447
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