Constrained Interactions and Social Coordination

We consider a co-evolutionary model of social coordination and network formation where agents may decide on an action in a 2x2-coordination game and on whom to establish costly links to. We find that a payoff dominant convention is selected for a wider parameter range when agents may only support a limited number of links as compared to a scenario where agents are not constrained in their linking choice. The main reason behind this result is that constrained interactions create a tradeoff between the interactions an agent has and those he would rather have. Further, we discuss convex linking costs and provide suffcient conditions for the payoff dominant convention to be selected in mxm coordination games.