Partial bandwagon effects and local interactions

Carlos Alós-Ferrer, Simon Weidenholzer

Research output: Contribution to journalArticlepeer-review

Abstract

We consider partial bandwagon properties in the context of coordination games to capture the idea of weak network externalities. We then study a local interactions model where agents play a coordination game following a noisy best-reply process. We show that globally pairwise risk dominant strategies are selected in arbitrary 3 × 3 coordination games, but not necessarily in larger games. A comparison with the global interactions benchmark shows that the nature of interactions might alter the long-run results themselves, and not only the speed of convergence. We also illustrate that the simultaneous coexistence of conventions is possible for games with at least 5 strategies.

Original languageEnglish (US)
Pages (from-to)179-197
Number of pages19
JournalGames and Economic Behavior
Volume61
Issue number2
DOIs
StatePublished - Nov 2007

Keywords

  • Bandwagon properties
  • Coordination games
  • Learning
  • Local interactions
  • Mutation

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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