Working Paper Article Version 5 This version is not peer-reviewed

Competing Conventions with Costly Information Acquisition

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)
Version 3 : Received: 10 May 2021 / Approved: 12 May 2021 / Online: 12 May 2021 (09:08:38 CEST)
Version 4 : Received: 27 May 2021 / Approved: 31 May 2021 / Online: 31 May 2021 (08:33:15 CEST)
Version 5 : Received: 16 June 2021 / Approved: 17 June 2021 / Online: 17 June 2021 (12:01:05 CEST)

A peer-reviewed article of this Preprint also exists.

Rozzi, R. Competing Conventions with Costly Information Acquisition. Games 2021, 12, 53. Rozzi, R. Competing Conventions with Costly Information Acquisition. Games 2021, 12, 53.

Journal reference: Games 2021, 12, 53
DOI: 10.3390/g12030053

Abstract

We consider an evolutionary model of social coordination in a 2x2 game where two groups of players prefer to coordinate on different actions. Players can pay a cost to learn their opponent's group: if they pay it, they can condition their actions on the groups. We assess the stability of outcomes in the long-run using stochastic stability analysis. We find that three elements matter for the equilibrium selection: the group size, the strength of preferences, and the information's cost. If the cost is too high, players never learn the group 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 sufficiently large compared to the other group, every player plays that group's favorite action. If both groups are strong enough in preferences, or if none of the group's size is large enough, players play their favorite actions and miscoordinate in inter-group interactions. Lower levels of the cost favor coordination. Indeed, when the cost is low, in inside-group interactions, players always coordinate on their favorite action, while in inter-group interactions, they 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: 17 June 2021
Commenter: Roberto Rozzi
Commenter's Conflict of Interests: Author
Comment: In this last version, I fixed some minor points and typos.
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