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