Interaction structure and social change

This paper studies the process of transition from an existing (coordination) norm to a new norm. Existing work focusses on the case where the externality generated by individual actions is uniform, i.e., an individual's action has the same effect on the payoff of every other individual. The present paper explores two non-uniform externality structures derived from group-based and local interaction. My analysis suggests that the likelihood, the extent as well as the speed of transition differ across interaction structures. These findings are used to explain a wide range of phenomena including the decline in linguistic diversity, the spread of new work norms in firms, the growth of the Internet and the evolution of table manners in Europe. (JEL: C 72, D 62, F 15, Z 10).