Decentralization and the Coordination Problem
This paper addresses the relation between the degree of decentralization in a population and the probability of coordinating on an efficient outcome. An evolutionary learning mechanism with a group structure that allows players to "vote with their feet" is introduced. In contrast to most of the recent literature (e.g. Kandori, Mailath and Rob, 1993) in which the risk dominant equilibrium is shown to prevail in the long run, in this paper it is demonstrated that given a general probability distribution over initial states the evolutionary learning process converges almost always to the efficient equilibrium if interaction is decentralized enough. Furthermore, it is shown how the model can be applied to the problem of product standardization.
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.:
- 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, December.
- Ellison, Glenn, 1993.
"Learning, Local Interaction, and Coordination,"
Econometric Society, vol. 61(5), pages 1047-1071, September.
- Glen Ellison, 2010. "Learning, Local Interaction, and Coordination," Levine's Working Paper Archive 391, David K. Levine.
- José Canals & Fernando Vega-Redondo, 1998. "Multi-level evolution in population games," International Journal of Game Theory, Springer;Game Theory Society, vol. 27(1), pages 21-35.
- Joerg Oechssler, 1993. "Competition among Conventions," Game Theory and Information 9312001, EconWPA, revised 04 Dec 1993.
- Kandori Michihiro & Rob Rafael, 1995. "Evolution of Equilibria in the Long Run: A General Theory and Applications," Journal of Economic Theory, Elsevier, vol. 65(2), pages 383-414, April.
- M. Kandori & R. Rob, 2010. "Evolution of Equilibria in the Long Run: A General Theory and Applications," Levine's Working Paper Archive 502, David K. Levine.
- Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
- Matsui, Akihiko, 1991. "Cheap-talk and cooperation in a society," Journal of Economic Theory, Elsevier, vol. 54(2), pages 245-258, August.
- Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-841, August.
- Oechssler, Jorg, 1997. "An Evolutionary Interpretation of Mixed-Strategy Equilibria," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 203-237, October.
- Joerg Oechssler, 1994. "An Evolutionary Interpretation Of Mixed-Strategy Equilibria," Game Theory and Information 9404001, EconWPA.
- Noldeke Georg & Samuelson Larry, 1993. "An Evolutionary Analysis of Backward and Forward Induction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 425-454, July.
- Noeldecke,Georg & Samuelson,Larry, "undated". "An evolutionary analysis of backward and forward induction," Discussion Paper Serie B 228, University of Bonn, Germany.
- G. Noldeke & L. Samuelson, 2010. "An Evolutionary Analysis of Backward and Forward Induction," Levine's Working Paper Archive 538, David K. Levine.
- Neil Gandal, 1994. "Hedonic Price Indexes for Spreadsheets and an Empirical Test for Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 160-170, Spring.
- Canning, D., 1990. "Social Equilibrium," Papers 150, Cambridge - Risk, Information & Quantity Signals.
- Boyer, Robert & Orlean, Andre, 1992. "How Do Conventions Evolve?," Journal of Evolutionary Economics, Springer, vol. 2(3), pages 165-177, October.
- Sobel, Joel, 1993. "Evolutionary stability and efficiency," Economics Letters, Elsevier, vol. 42(2-3), pages 301-312.
- Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
- Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
- M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
- Farrell, Joseph & Saloner, Garth, 1986. "Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation," American Economic Review, American Economic Association, vol. 76(5), pages 940-955, December.
- Samuelson, L., 1991. "How to Tremble if you Must," Working papers 9122, Wisconsin Madison - Social Systems.
- Vega-Redondo Fernando, 1993. "Competition and Culture in an Evolutionary Process of Equilibrium Selection: A Simple Example," Games and Economic Behavior, Elsevier, vol. 5(4), pages 618-631, October.
- Joseph Farrell & Garth Saloner, 1985. "Installed Base and Compatibility With Implications for Product Preannouncements," Working papers 385, Massachusetts Institute of Technology (MIT), Department of Economics.
- Joseph Farrell & Garth Saloner, 1986. "Installed Base and Compatibility, With Implications for Product Preannouncements," Working papers 411, Massachusetts Institute of Technology (MIT), Department of Economics.
- Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
- Akihiko Matsui, 1989. "Cheap Talk and Cooperation in the Society," Discussion Papers 848, Northwestern University, Center for Mathematical Studies in Economics and Management Science. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpga:9403004. 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: (EconWPA)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.