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Social preferences on networks

Author

Listed:
  • Westbrock, Bastian
  • Rosenkranz, Stephanie
  • Rezaei, Sarah
  • Weitzel, Utz

Abstract

We develop a model of social preferences for network games and study its predictions in a local public goods game with multiple equilibria. The key feature is that players' social preferences are heterogeneous. This gives room for disagreement between players about the "right" payoff ordering. When preferences are compatible, however, players coordinate on a refined equilibrium set. How easily the requirements for preference compatibility are met crucially depends on a property of the network structure: neighborhood nestedness. This means that equilibrium selection succeeds in small, connected structures but also in centralized networks. All predictions are confirmed in an experiment.

Suggested Citation

  • Westbrock, Bastian & Rosenkranz, Stephanie & Rezaei, Sarah & Weitzel, Utz, 2021. "Social preferences on networks," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242447, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc21:242447
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    More about this item

    Keywords

    social preferences; network games; equilibrium selection;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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