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Information, Matching and Outcome Selection

Author

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  • Virginie Masson

    (School of Economics, University of Adelaide)

Abstract

We consider a finite population of agents who exchange information and are paired every period to play a game with tension between risk dominance and Pareto efficiency. Agents sample past plays and corresponding payoffs from their information neighborhood, and choose one of two possible actions using either best response or imitation. Information exchanges and possible matchings each constitutes a network. We first provide a complete description of the medium run outcomes and show that in the medium run only information matters. We then identify the conditions whereby either the risk dominant or the Pareto efficient convention is stochastically stable, and show how efficiency in the long run depends on the matching network.

Suggested Citation

  • Virginie Masson, 2011. "Information, Matching and Outcome Selection," School of Economics and Public Policy Working Papers 2011-13, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2011-13
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    File URL: https://media.adelaide.edu.au/economics/papers/doc/wp2011-13.pdf
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    References listed on IDEAS

    as
    1. Alós-Ferrer, Carlos & Weidenholzer, Simon, 2008. "Contagion and efficiency," Journal of Economic Theory, Elsevier, vol. 143(1), pages 251-274, November.
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    Cited by:

    1. Alós-Ferrer, Carlos & Weidenholzer, Simon, 2014. "Imitation and the role of information in overcoming coordination failures," Games and Economic Behavior, Elsevier, vol. 87(C), pages 397-411.

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    More about this item

    Keywords

    Contagion; networks; coordination games; best response; imitation;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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