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More neighbors, more efficiency

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  • Cui, Zhiwei

Abstract

This paper considers a finite population of agents located within an arbitrary fixed network. Every agent plays a coordination game with his neighbors. If one neighbor's payoff from a specific interaction exceeds his average payoff per interaction, the neighbor is perceived as better performing. Over time agents imitate the strategies of their better performing neighbors; occasionally they make mistakes. Sufficient conditions for emergence of Pareto efficient and risk dominant conventions are provided. The paper also illustrates the main results through relevant examples.

Suggested Citation

  • Cui, Zhiwei, 2014. "More neighbors, more efficiency," Journal of Economic Dynamics and Control, Elsevier, vol. 40(C), pages 103-115.
  • Handle: RePEc:eee:dyncon:v:40:y:2014:i:c:p:103-115 DOI: 10.1016/j.jedc.2013.12.012
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    References listed on IDEAS

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    Cited by:

    1. Cui, Zhiwei & Wang, Rui, 2016. "Collaboration in networks with randomly chosen agents," Journal of Economic Behavior & Organization, Elsevier, vol. 129(C), pages 129-141.

    More about this item

    Keywords

    Local interaction; Coordination game; Imitation; Contagion;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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