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Social Reinforcement: Cascades, Entrapment and Tipping

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  • Geoffrey Heal
  • Howard Kunreuther

Abstract

There are many social situations in which the actions of different agents reinforce each other. These include network effects and the threshold models used by sociologists (Granovetter, Watts) as well as Leibenstein's "bandwagon effects." We model such situations as a game with increasing differences, and show that tipping of equilibria as discussed by Schelling, cascading and Dixit's results on clubs with entrapment are natural consequences of this mutual reinforcement. If there are several equilibria, one of which Pareto dominates, then we show that the inefficient equilibria can be tipped to the efficient one, a result of interest in the context of coordination problems.

Suggested Citation

  • Geoffrey Heal & Howard Kunreuther, 2007. "Social Reinforcement: Cascades, Entrapment and Tipping," NBER Working Papers 13579, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:13579
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    Citations

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    Cited by:

    1. Natasha Chichilnisky-Heal & Geoffrey Heal, 2015. "Host-MNC Relations in Resource-Rich Countries," NBER Working Papers 21712, National Bureau of Economic Research, Inc.
    2. Shafran, Aric P. & Lepore, Jason J., 2011. "Subsidization to induce tipping," Economics Letters, Elsevier, vol. 110(1), pages 32-35, January.
    3. Robert Hahn & Robert Ritz, 2014. "Optimal Altruism in Public Good Provision," Cambridge Working Papers in Economics 1403, Faculty of Economics, University of Cambridge.
    4. Heggedal, Tom-Reiel & Helland, Leif, 2014. "Platform selection in the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 168-177.
    5. repec:spr:climat:v:144:y:2017:i:1:d:10.1007_s10584-017-2043-8 is not listed on IDEAS
    6. Cohen, Mark A. & Vandenbergh, Michael P., 2012. "The potential role of carbon labeling in a green economy," Energy Economics, Elsevier, vol. 34(S1), pages 53-63.
    7. Diane Coyle, 2016. "The Political Economy of National Statistics," The School of Economics Discussion Paper Series 1603, Economics, The University of Manchester.
    8. Richter, Andries & van Soest, Daan & Grasman, Johan, 2013. "Contagious cooperation, temptation, and ecosystem collapse," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 141-158.
    9. David Goldbaum, 2016. "Conformity and Influence," Working Paper Series 35, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
    10. Fergus Green, 2015. "Nationally Self-Interested Climate Change Mitigation: A Unified Conceptual Framework," GRI Working Papers 199, Grantham Research Institute on Climate Change and the Environment.
    11. Tavoni, Alessandro & Levin, Simon, 2014. "Managing the climate commons at the nexus of ecology, behaviour and economics," LSE Research Online Documents on Economics 60823, London School of Economics and Political Science, LSE Library.
    12. AJ Bostian & David Goldbaum, 2016. "Emergent Coordination among Competitors," Working Paper Series 36, Economics Discipline Group, UTS Business School, University of Technology, Sydney.

    More about this item

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other

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