Evolution of Conventions in Endogenous Social Networks
We analyze the dynamic implications of learning in a large population coordination game where both the actions of the players and the communication network between these players evolve over time. We depart from the conventional models in assuming that the interaction network itself is subject to evolutionary pressure. Cost considerations of social interaction are incorporated by application of a circular model in which all players are located at equal distances along a circle. Although the locations of the players are fixed they can create their own interaction neighborhood by forming and severing links with other players. The spatial structure of the model is then used to determine the costs of establishing a communication link between a pair of players. Namely, we assume that the larger the distance between two players on the circle, the larger the maintenance costs of the mutual link will be. As maintenance costs include invested time and effort, distance should not only be interpreted as physical distance but may also represent social distance. We follow standard evolutionary game theoretic practice to determine the equilibria in this setting. The resulting equilibrium represents the players' medium run behavior if perturbations representing players' mistakes are absent. We find that in this medium run case, the dynamic process converges to an absorbing state. These absorbing states include ones in which there emerge local conventions, i.e., fully connected neighborhoods of players who coordinate on the same strategy. In the ultralong run, i.e., when perturbations representing players' mistakes are taken into account, coexistence of conventions is no longer possible. We show that the risk-dominant convention is the unique stochastically stable convention, meaning that it will be observed almost surely when the mistake probabilities are small but nonvanishing. This confirms the insights obtained in Ellison (1993) for fixed spatial interaction structures.
|Date of creation:||01 Aug 2000|
|Date of revision:|
|Contact details of provider:|| Phone: 1 212 998 3820|
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aderlini, L. & Ianni, A., 1993.
"Path Dependence and Learning from Neighbours,"
186, Cambridge - Risk, Information & Quantity Signals.
- Ellison, Glenn, 1993.
"Learning, Local Interaction, and Coordination,"
Econometric Society, vol. 61(5), pages 1047-71, September.
- BERGIN, James & LIPMAN, Bart, 1994.
"Evolution with State-Dependent Mutations,"
CORE Discussion Papers
1994055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- James Bergin & B. L. Lipman, 1994. "Evolution with state-dependent mutations," Working Papers 199411, School of Economics, University College Dublin.
- J. Bergin & B. Lipman, 2010. "Evolution with State-Dependent Mutations," Levine's Working Paper Archive 486, David K. Levine.
- J Bergin & B L Lipman, 1997. "Evolution with state-dependent Mutations," Levine's Working Paper Archive 771, David K. Levine.
- van Damme, E.E.C. & Weibull, J., 1998.
"Evolution with Mutations Driven by Control Costs,"
1998-94, Tilburg University, Center for Economic Research.
- Weibull, Jörgen W. & van Damme, Eric, 1998. "Evolution with Mutations Driven by Control Costs," Working Paper Series 501, Research Institute of Industrial Economics.
- Eric Van Damme & Jorgen W Weibull, 1999. "Evolution with Mutations Driven by Control Costs," Levine's Working Paper Archive 2113, David K. Levine.
- Fernando Vega Redondo & Ventakamaran Bhaskar, 1996.
"Migration and the evolution of conventions,"
Working Papers. Serie AD
1996-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Goyal, Sanjeev & Janssen, Maarten C. W., 1997. "Non-Exclusive Conventions and Social Coordination," Journal of Economic Theory, Elsevier, vol. 77(1), pages 34-57, November.
- Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993.
"Learning, Mutation, and Long Run Equilibria in Games,"
Econometric Society, vol. 61(1), pages 29-56, January.
- M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
- Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
- Matthew O. Jackson & Asher Wolinsky, 1994.
"A Strategic Model of Social and Economic Networks,"
1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, June.
- repec:att:wimass:9324 is not listed on IDEAS
- George J. Mailath & Larry Samuelson & Avner Shaked, 1997. "Endogenous Interactions," CARESS Working Papres endo-one, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
When requesting a correction, please mention this item's handle: RePEc:ecm:wc2000:0594. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.