What Matters Most: Information or Interaction? The Importance of Behavioral Rules on Network Effects for Contagion Processes
AbstractWe consider a finite population of agents and define a contagion process as the dynamics by which an action, which is initially played by only a small subset of agents, is adopted by the entire population. Each agent has a set of neighbors with whom he shares information and a set of partners with whom he plays a game. These two sets may or may not coincide. Each period, agents choose their actions based on what they observe from their neighbors, and get some payoff from playing a game with their partners. We show that contagion of an action that is risk dominant and efficient is obtained through partners when agents imitate-the-best, and through neighbors when agents use a myopic best response.
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Bibliographic InfoPaper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2009-35.
Length: 20 pages
Date of creation: 2009
Date of revision:
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- Alós-Ferrer, Carlos & Weidenholzer, Simon, 2008. "Contagion and efficiency," Journal of Economic Theory, Elsevier, vol. 143(1), pages 251-274, November.
- Dunia López-Pintado, 2006. "Contagion and coordination in random networks," International Journal of Game Theory, Springer, vol. 34(3), pages 371-381, October.
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