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Imitation and the Role of Information in Overcoming Coordination Failures

We model the structure of a firm or an organization as a network and consider minimum-effort games played on this network as a metaphor for cooperations failing due to coordination failures. For a family of behavioral rules, including Imitate the Best and the Proportional Imitation Rule, we show that inefficient conventions arise independently of the interaction structure, if information is limited to the interaction neighborhoods. However, in the presence of informational spillovers, a minimal condition on the network guarantees that efficient conventions will eventually dominate. An analogous result is established for average opinion games.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie1008.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1008.

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Date of creation: Sep 2010
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Handle: RePEc:vie:viennp:1008
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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