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Local information hinders coordination in endogenous networks

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  • Lu, Feifei

Abstract

We model economic coordination as a minimum-effort game played repeatedly on a network, with endogenous partner selection (network formation). Coordination on the high-effort equilibrium is achieved under global information provided the population size is large enough. In contrast, under local information, agents are too conservative when choosing unknown partners and the low-effort equilibrium prevails.

Suggested Citation

  • Lu, Feifei, 2023. "Local information hinders coordination in endogenous networks," Economics Letters, Elsevier, vol. 223(C).
    • Handle: RePEc:eee:ecolet:v:223:y:2023:i:c:s0165176523000216
    DOI: 10.1016/j.econlet.2023.110996
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Minimum-effort games; Network formation; Equilibrium selection; Local information;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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