Anderlini, L. and Ianni, A.
Path-dependence and learning from neighbors
Games and Economic Behavior, 13, (2), . (doi:10.1006/game.1996.0032).
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We study the long-run properties of a class of locally interactive learning systems. A finite set of players at fixed locations play a two-by-two symmetric normal form game with strategic complementarities, with one of their “neighbors” selected at random. Because of the endogenous nature of experimentation, or “noise,” the systems we study exhibit a high degree of path dependence. Different actions of a pure coordination game may survive in the long-run at different locations of the system. A reinterpretation of our results shows that the local nature of search may be a robust reason for price dispersion in a search model.
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