Title

Coordination and Evolutionary Network Formation with Asymmetric Link Costs: Part One

Abstract

We analyze a dynamic implication of an evolutionary process in a population where both actions and network structures changes over time.
  At every period, a coordination game is played by players who are linked with each other. An asymmetric cost of a link is incorporated. Under this setting each player myopically adopts with its circumstance consisting of the network structure and the action profile.
  In a stochastically stable state there are link cost patterns such that all players play a pareto dominant equilibrium strategy of coordination game. This is the most different result from a standard stochastic evolutionary models that selects a risk dominant equilibrium.

Key words: Network formation, coordination game, stochastic evolution, asymmetric link cost, pareto dominant equilibrium, risk dominant equilibrium

Masakazu FUKUZUMI
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: (81) 78 803 7036
Fax: (81) 78 803 7059