AbstractA local interaction game is a game where agents play an identical stage game against their neighbors over time. This paper obtains a general result on the long-run equilibrium distribution of the local interaction game whose stage game is the 2 x 2 coordination game. It is established that starting from a random initial configuration with a positive probability of playing the risk dominant strategy, a sufficiently large population coordinates on the risk dominant equilibrium with probability 1 for the nearest neighbor interaction Our result improves previous ones including Blume (1995), Ellison (1993,1995), and Morris (1997) in a non-trivial way. It proves that there is an interactive contagion mechanism through which the risk dominant equilibrium may spread, in addition to the autonomous mechanism considered by others. Taking advantage of the mechanism we prove that for the nearest neighbor interaction, half dominance is sufficient for the degenerate long-run equilibrium distribution concentrated on the risk dominant strategy.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 9712.
Date of creation: 01 Jan 1997
Date of revision:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laffont, Jean-Jacques & Maskin, Eric, 1980. "A Differential Approach to Dominant Strategy Mechanisms," Econometrica, Econometric Society, vol. 48(6), pages 1507-20, September.
- Postlewaite, Andrew & Wettstein, David, 1989. "Feasible and Continuous Implementation," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 603-11, October.
- Tian, Guoqiang, 1988. "On the constrained Walrasian and Lindahl correspondences," Economics Letters, Elsevier, vol. 26(4), pages 299-303.
- Groves, Theodore & Ledyard, John O, 1977.
"Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem,"
Econometric Society, vol. 45(4), pages 783-809, May.
- Theodore Groves & John Ledyard, 1976. "Optimal Allocation of Public Goods: A Solution to the 'Free Rider Problem'," Discussion Papers 144, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Groves, Theodore & Ledyard, John O, 1980.
"The Existence of Efficient and Incentive Compatible Equilibria with Public Goods,"
Econometric Society, vol. 48(6), pages 1487-1506, September.
- Groves, Theodore & Ledyard, John O., 1978. "The Existence of Efficient and Incentive Compatible Equilibria with Public Goods," Working Papers 203, California Institute of Technology, Division of the Humanities and Social Sciences.
- Hurwicz, Leonid, 1979. "On allocations attainable through Nash equilibria," Journal of Economic Theory, Elsevier, vol. 21(1), pages 140-165, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Thorn).
If references are entirely missing, you can add them using this form.