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More neighbors, more efficiency

  • Cui, Zhiwei

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.

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File URL: http://www.sciencedirect.com/science/article/pii/S0165188914000025
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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 40 (2014)
Issue (Month): C ()
Pages: 103-115

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Handle: RePEc:eee:dyncon:v:40:y:2014:i:c:p:103-115
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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  18. Fagiolo, Giorgio, 2005. "Endogenous neighborhood formation in a local coordination model with negative network externalities," Journal of Economic Dynamics and Control, Elsevier, vol. 29(1-2), pages 297-319, January.
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