TY - JOUR
T1 - Constrained Interactions and Social Coordination
AU - Staudigl, Mathias
AU - Weidenholzer, Simon
PY - 2014
Y1 - 2014
N2 - We consider a co-evolutionary model of social coordination and network formation where agents may decide on an action in a 2 x 2-coordination game and on whom to establish costly links to. We find that if agents may only support a limited number of links payoff dominant conventions will emerge in the long run, contrasting the case of unconstrained interactions where risk dominant conventions arise for a wide range of parameters. Under constrained iterations, already a small number of agents choosing the payoff dominant action enables agents - by linking up to those agents and choosing the payoff dominant action - to secure themselves the highest possible payoff. We extend our model by discussing constrained interactions in the context of general m x m games, convex payoff functions, heterogeneous constraints, and frictions in link formation. (C) 2014 Elsevier Inc. All rights reserved.
AB - We consider a co-evolutionary model of social coordination and network formation where agents may decide on an action in a 2 x 2-coordination game and on whom to establish costly links to. We find that if agents may only support a limited number of links payoff dominant conventions will emerge in the long run, contrasting the case of unconstrained interactions where risk dominant conventions arise for a wide range of parameters. Under constrained iterations, already a small number of agents choosing the payoff dominant action enables agents - by linking up to those agents and choosing the payoff dominant action - to secure themselves the highest possible payoff. We extend our model by discussing constrained interactions in the context of general m x m games, convex payoff functions, heterogeneous constraints, and frictions in link formation. (C) 2014 Elsevier Inc. All rights reserved.
U2 - 10.1016/J.JET.2014.04.001
DO - 10.1016/J.JET.2014.04.001
M3 - Article
SN - 0022-0531
JO - Journal of Economic Theory
JF - Journal of Economic Theory
ER -