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Imitation, network size, and efficiency


Alos-Ferrer, Carlos; Buckenmaier, Johannes; Farolfi, Federica (2020). Imitation, network size, and efficiency. Network Science (New York):Epub ahead of print.

Abstract

A number of theoretical results have provided sufficient conditions for the selection of payoff-efficient equilibria in games played on networks when agents imitate successful neighbors and make occasional mistakes (stochastic stability). However, those results only guarantee full convergence in the long-run, which might be too restrictive in reality. Here, we employ a more gradual approach relying on agent-based simulations avoiding the double limit underlying these analytical results. We focus on the circular-city model, for which a sufficient condition on the population size relative to the neighborhood size was identified by Alós-Ferrer &amp; Weidenholzer [(2006) <jats:italic>Economics Letters</jats:italic>, <jats:italic>93</jats:italic>, 163–168]. Using more than 100,000 agent-based simulations, we find that selection of the efficient equilibrium prevails also for a large set of parameters violating the previously identified condition. Interestingly, the extent to which efficiency obtains decreases gradually as one moves away from the boundary of this condition.

Abstract

A number of theoretical results have provided sufficient conditions for the selection of payoff-efficient equilibria in games played on networks when agents imitate successful neighbors and make occasional mistakes (stochastic stability). However, those results only guarantee full convergence in the long-run, which might be too restrictive in reality. Here, we employ a more gradual approach relying on agent-based simulations avoiding the double limit underlying these analytical results. We focus on the circular-city model, for which a sufficient condition on the population size relative to the neighborhood size was identified by Alós-Ferrer &amp; Weidenholzer [(2006) <jats:italic>Economics Letters</jats:italic>, <jats:italic>93</jats:italic>, 163–168]. Using more than 100,000 agent-based simulations, we find that selection of the efficient equilibrium prevails also for a large set of parameters violating the previously identified condition. Interestingly, the extent to which efficiency obtains decreases gradually as one moves away from the boundary of this condition.

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Additional indexing

Item Type:Journal Article, not_refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Sociology and Political Science, Communication, Social Psychology, agent-based models, pareto efficiency, risk dominance, imitation, networks, stochastic stability
Language:English
Date:4 December 2020
Deposited On:04 Dec 2020 12:07
Last Modified:04 Dec 2020 17:16
Publisher:Cambridge University Press
ISSN:2050-1250
OA Status:Closed
Publisher DOI:https://doi.org/10.1017/nws.2020.43

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