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Existence of Pure Strategies Nash Equilibria in Social Interaction Games with Dyadic Externalities

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  • Le Breton, Michel
  • Weber, Shlomo
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    Abstract

    In this note we introduce a general class of games where the payoff of every player are affected by her intrinsic taste for available strategic choices; intensity of her dyadic social interactions of with others in the peer group; and conformity effect. We show, that if the dyadic social influences are symmetric and the conformity effect is identical for all players, every game in our class admits a Nash equilibrium in pure strategies. Our proof relies on the fact that our game is potential (Rosenthal (1973), Monderer and Shapley (1996)). We also illustrate the universality of our result through a large spectrum of applications in economics, political science and sociology.

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    Bibliographic Info

    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7279.

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    Date of creation: Apr 2009
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    Handle: RePEc:cpr:ceprdp:7279

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    Related research

    Keywords: conformity effect; dyadic externalities; Nash equilibria; potential games; Social interactions;

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    Cited by:
    1. Le Breton, Michel & Weber, Shlomo, 2011. "Games of social interactions with local and global externalities," Economics Letters, Elsevier, vol. 111(1), pages 88-90, April.

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