Influence and Social Tragedy in Networks
AbstractWe model agents in a network game of strategic complements and negative externalities. Sufficient conditions for the existence of a unique Nash equilibrium and of a unique social optimum are established. Under these conditions, we find that players with more vulnerable locations in the network exert more effort at equilibrium, and that the most influential players should exert less effort at efficiency. We then find structural conditions under which each player exerts strictly more effort than her efficient level, whether the social optimum be interior or not.
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Date of creation: 06 Jan 2014
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Network; strategic complements; equilibrium; efficiency; social tragedy.;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-01-17 (All new papers)
- NEP-GTH-2014-01-17 (Game Theory)
- NEP-MIC-2014-01-17 (Microeconomics)
- NEP-NET-2014-01-17 (Network Economics)
- NEP-SOC-2014-01-17 (Social Norms & Social Capital)
- NEP-URE-2014-01-17 (Urban & Real Estate Economics)
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