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More neighbors, more efficiency

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  • Cui, Zhiwei

Abstract

This paper considers a finite population of agents located within an arbitrary fixed network. Every agent plays a coordination game with his neighbors. If one neighbor's payoff from a specific interaction exceeds his average payoff per interaction, the neighbor is perceived as better performing. Over time agents imitate the strategies of their better performing neighbors; occasionally they make mistakes. Sufficient conditions for emergence of Pareto efficient and risk dominant conventions are provided. The paper also illustrates the main results through relevant examples.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 40 (2014)
Issue (Month): C ()
Pages: 103-115

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Handle: RePEc:eee:dyncon:v:40:y:2014:i:c:p:103-115

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Web page: http://www.elsevier.com/locate/jedc

Related research

Keywords: Local interaction; Coordination game; Imitation; Contagion;

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References

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  14. Lee, In Ho & Valentinyi, Akos, 2000. "Noisy Contagion without Mutation," Review of Economic Studies, Wiley Blackwell, vol. 67(1), pages 47-56, January.
  15. Anderlini, Luca & Ianni, Antonella, 1996. "Path Dependence and Learning from Neighbors," Games and Economic Behavior, Elsevier, vol. 13(2), pages 141-177, April.
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  17. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  18. Alos-Ferrer, Carlos & Weidenholzer, Simon, 2006. "Imitation, local interactions, and efficiency," Economics Letters, Elsevier, vol. 93(2), pages 163-168, November.
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