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Social Reinforcement: Cascades, Entrapment and Tipping

  • Geoffrey Heal
  • Howard Kunreuther

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.

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File URL: http://www.nber.org/papers/w13579.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13579.

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Date of creation: Nov 2007
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Publication status: published as Geoffrey Heal & Howard Kunreuther, 2010. "Social Reinforcement: Cascades, Entrapment, and Tipping," American Economic Journal: Microeconomics, American Economic Association, vol. 2(1), pages 86-99, February.
Handle: RePEc:nbr:nberwo:13579
Note: EEE PE
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  1. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," NBER Working Papers 7580, National Bureau of Economic Research, Inc.
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