Diffusion of Behavior and Equilibrium Properties in Network Games
Year: 2007
Type: article
Abstract: We analyze games on social networks where agents select one of two actions (whether or not to adopt a new technology, withdraw money from the bank, become politically active, etc.). Agents' payoffs from each of the two actions depend on how many neighbors she has, the distribution of actions among her neighbors, and a possibly idiosyncratic cost for each of the actions. We analyze the diffusion of behavior when in each period agents choose a best response to last period's behavior. We characterize how the equilibrium points of such a process and their stability depend on the network architecture, the distribution of costs, and the payoff structure. We also illustrate how the dynamics of behavior depends on the number of neighbors that agents have. Our results have implications and applications to marketing, epidemiology, financial contagions, and technology adoption.
Source: American Economic Review
DOI: 10.1257/aer.97.2.92
Authors: Matthew O Jackson, Leeat Yariv
Institutions: Stanford University, California Institute of Technology
Language: English
Topic: Game Theory and Applications
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2132038800