Working Paper Article Version 2 This version is not peer-reviewed

Competing Conventions with Costly Acquisition of Information

Version 1 : Received: 22 February 2021 / Approved: 23 February 2021 / Online: 23 February 2021 (19:33:44 CET)
Version 2 : Received: 7 April 2021 / Approved: 8 April 2021 / Online: 8 April 2021 (10:22:37 CEST)

How to cite: Rozzi, R. Competing Conventions with Costly Acquisition of Information. Preprints 2021, 2021020534 Rozzi, R. Competing Conventions with Costly Acquisition of Information. Preprints 2021, 2021020534

Abstract

We consider an evolutionary model of social coordination in a 2x2 game where two groups of agents prefer to coordinate on different actions. Agents can pay a cost to learn their opponent's type: conditional on this decision, they can play different actions with different types. We assess the stability of outcomes in the long-run using stochastic stability analysis. We find that three elements matter for the equilibrium selection: group size, the strength of preferences, and the information's cost. If the cost is too high, agents never learn the type of their opponents in the long-run. If one group is stronger in preferences for its favorite action than the other, or its size is large enough compared to the other group, every agent plays that action. If both groups are strong enough in preferences, or if none of the group's size is large enough, agents play their favorite actions, and they miscoordinate in inter-group interactions. When the cost is sufficiently low, agents always learn the type of their opponent in the long-run. Therefore, they always coordinate. In inside-group interactions, agents always coordinate on their favorite action. In inter-group interactions, agents coordinate on the favorite action of the group that is stronger in preferences or large enough.

Subject Areas

evolutionary game theory; social conventions; costly acquisition of information

Comments (1)

Comment 1
Received: 8 April 2021
Commenter: Roberto Rozzi
Commenter's Conflict of Interests: Author
Comment: The biggest change is in the notation and the model's definition. I changed the notation for strategies and states. I describe more compactly the inertia and myopia assumptions. I changed the way I define strategies adopting the formal way of presenting them: I group them in relevant behaviors affecting the dynamics and the individual payoffs. I explain why how I treat strategies does not affect the stochastic stability analysis. I explain clearly the assumptions on the mistakes, and I adopt a more formal language throughout the paper. 
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