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Constrained interactions and social coordination

  • Staudigl, Mathias
  • Weidenholzer, Simon

We consider a co-evolutionary model of social coordination and network formation where agents may decide on an action in a 2×2-coordination game and on whom to establish costly links to. We find that if agents may only support a limited number of links payoff dominant conventions will emerge in the long run, contrasting the case of unconstrained interactions where risk dominant conventions arise for a wide range of parameters. Under constrained iterations, already a small number of agents choosing the payoff dominant action enables agents – by linking up to those agents and choosing the payoff dominant action – to secure themselves the highest possible payoff. We extend our model by discussing constrained interactions in the context of general m×m games, convex payoff functions, heterogeneous constraints, and frictions in link formation.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 152 (2014)
Issue (Month): C ()
Pages: 41-63

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Handle: RePEc:eee:jetheo:v:152:y:2014:i:c:p:41-63
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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