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Interactive contagion

Record type: Monograph (Discussion Paper)

A local interaction game is a game where agents play an identical stage game against their neighbors over time. This paper obtains a general result on the long-run equilibrium distribution of the local interaction game whose stage game is the 2 x 2 coordination game. It is established that starting from a random initial configuration with a positive probability of playing the risk dominant strategy, a sufficiently large population coordinates on the risk dominant equilibrium with probability 1 for the nearest neighbor interaction

Our result improves previous ones including Blume (1995), Ellison (1993,1995), and Morris (1997) in a non-trivial way. It proves that there is an interactive contagion mechanism through which the risk dominant equilibrium may spread, in addition to the autonomous mechanism considered by others. Taking advantage of the mechanism we prove that for the nearest neighbor interaction, half dominance is sufficient for the degenerate long-run equilibrium distribution concentrated on the risk dominant strategy.

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Citation

Lee, I.H. and Valentinyi, A. (1997) Interactive contagion , Southampton, UK University of Southampton (Discussion Papers in Economics and Econometrics, 9712).

More information

Published date: January 1997

Identifiers

Local EPrints ID: 33186
URI: http://eprints.soton.ac.uk/id/eprint/33186
PURE UUID: e3bb25a2-712e-4786-a4f6-7164b8de4c5b

Catalogue record

Date deposited: 25 Jan 2008
Last modified: 17 Jul 2017 15:53

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Contributors

Author: I.H. Lee
Author: A. Valentinyi

University divisions


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