Imitation, network size, and efficiency

Alós-Ferrer, C., Buckenmaier, J. and Farolfi, F. (2021) Imitation, network size, and efficiency. Network Science, 9(1), pp. 123-133. (doi: 10.1017/nws.2020.43)

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 & Weidenholzer [(2006) Economics Letters, 93, 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.

• Item Type: Articles
• Additional Information: Financial support from the German Research Foundation (DFG) through project AL-1169/5-1 is gratefully acknowledged.
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Farolfi, Dr Federica
• Authors: Alós-Ferrer, C., Buckenmaier, J., and Farolfi, F.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: Network Science
• Publisher: Cambridge University Press
• ISSN: 2050-1242
• ISSN (Online): 2050-1250
• Published Online: 04 December 2020