Network formation dynamics in asymmetric coordination games

Previous research has examined how endogenous network formation decisions affect consensus or segregation in coordination games with asymmetric payoffs. Agents were assumed to evaluate tie formation or termination based on prospective coordination payoffs and associated cost constraints. The present study extends this line of research by investigating how preferences for specific network configurations influence network formation decisions beyond prospective coordination payoffs. We built an agent-based model with N self-interested agents optimizing a utility function that included: (a) prospective coordination payoffs; (b) agent-specific network formation costs; and (c) network-based preferences, that is, preferences for connecting with high-degree, popular partners, regardless of their choices in the coordination dilemma. We explored the trade-offs and interactions between coordination dynamics, network formation costs, and popularity-based preferences across various simulation scenarios. Our results show that when costs are not prohibitively high, popularity-related network preferences leading to more centralized networks promote more efficient coordination on a consensus outcome. Conversely, segregated and disconnected networks tend to emerge when network formation costs are very low, or the relative importance of popularity-related preferences is lower compared to coordination payoffs.