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What Matters Most: Information or Interaction? The Importance of Behavioral Rules on Network Effects for Contagion Processes

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  • Virginie Masson

    (School of Economics, University of Adelaide)

  • Simon Angus

    (School of Economics, Monash University)

Abstract

We consider a finite population of agents and define a contagion process as the dynamics by which an action, which is initially played by only a small subset of agents, is adopted by the entire population. Each agent has a set of neighbors with whom he shares information and a set of partners with whom he plays a game. These two sets may or may not coincide. Each period, agents choose their actions based on what they observe from their neighbors, and get some payoff from playing a game with their partners. We show that contagion of an action that is risk dominant and efficient is obtained through partners when agents imitate-the-best, and through neighbors when agents use a myopic best response.

Suggested Citation

  • Virginie Masson & Simon Angus, 2009. "What Matters Most: Information or Interaction? The Importance of Behavioral Rules on Network Effects for Contagion Processes," School of Economics and Public Policy Working Papers 2009-35, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2009-35
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    References listed on IDEAS

    as
    1. Dunia López-Pintado, 2006. "Contagion and coordination in random networks," International Journal of Game Theory, Springer;Game Theory Society, vol. 34(3), pages 371-381, October.
    2. Alós-Ferrer, Carlos & Weidenholzer, Simon, 2008. "Contagion and efficiency," Journal of Economic Theory, Elsevier, vol. 143(1), pages 251-274, November.
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