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Article
Contagion and Efficiency
Journal of Economic Theory (2008)
  • Carlos Alós-Ferrer, University of Konstanz
  • Simon Weidenholzer, University of Vienna
Abstract

We consider a population of agents, either finite or countably infinite, located on an arbitrary network. Agents interact directly only with their immediate neighbors, but are able to observe the behavior of (some) other agents beyond their interaction neighborhood, and learn from that behavior by imitating successful actions. If interactions are not “too global” but information is fluid enough, we show that the efficient action is the only one which can spread contagiously to the whole population from an initially small, finite subgroup. This result holds even in the presence of an alternative, 1/2 - dominant action.

Keywords
  • Local Interaction Games,
  • Learning,
  • Imitation,
  • Contagion,
  • Networks
Disciplines
Publication Date
2008
Citation Information
Carlos Alós-Ferrer and Simon Weidenholzer. "Contagion and Efficiency" Journal of Economic Theory Vol. forthcoming (2008)
Available at: http://works.bepress.com/alos/17/