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Social Reinforcement: Cascades, Entrapment and Tipping

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  • Geoffrey Heal
  • Howard Kunreuther

Abstract

There are many social situations in which the actions of different agents reinforce each other. These include network effects and the threshold models used by sociologists (Granovetter, Watts) as well as Leibenstein's "bandwagon effects." We model such situations as a game with increasing differences, and show that tipping of equilibria as discussed by Schelling, cascading and Dixit's results on clubs with entrapment are natural consequences of this mutual reinforcement. If there are several equilibria, one of which Pareto dominates, then we show that the inefficient equilibria can be tipped to the efficient one, a result of interest in the context of coordination problems.

Suggested Citation

  • Geoffrey Heal & Howard Kunreuther, 2007. "Social Reinforcement: Cascades, Entrapment and Tipping," NBER Working Papers 13579, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:13579
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    Cited by:

    1. Natasha Chichilnisky-Heal & Geoffrey Heal, 2015. "Host-MNC Relations in Resource-Rich Countries," NBER Working Papers 21712, National Bureau of Economic Research, Inc.
    2. Alessandro Tavoni & Simon Levin, 2014. "Managing the climate commons at the nexus of ecology, behaviour and economics," Nature Climate Change, Nature, vol. 4(12), pages 1057-1063, December.
    3. Zhihan Cui & Geoffrey Heal & Howard Kunreuther & Lu Liu, 2021. "The Political Economy of Responses to COVID-19 in the U.S.A," NBER Working Papers 28578, National Bureau of Economic Research, Inc.
    4. Trevor Kollmann & Simone Marsiglio & Sandy Suardi & Marco Tolotti, 2021. "Social interactions, residential segregation and the dynamics of tipping," Journal of Evolutionary Economics, Springer, vol. 31(4), pages 1355-1388, September.
    5. Geoffrey Heal & Howard Kunreuther, 2017. "An alternative framework for negotiating climate policies," Climatic Change, Springer, vol. 144(1), pages 29-39, September.
    6. Richter, Andries & van Soest, Daan & Grasman, Johan, 2013. "Contagious cooperation, temptation, and ecosystem collapse," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 141-158.
    7. Cohen, Mark A. & Vandenbergh, Michael P., 2012. "The potential role of carbon labeling in a green economy," Energy Economics, Elsevier, vol. 34(S1), pages 53-63.
    8. Goldbaum David, 2019. "Conformity and Influence," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 19(1), pages 1-29, January.
    9. Fergus Green, 2015. "Nationally Self-Interested Climate Change Mitigation: A Unified Conceptual Framework," GRI Working Papers 199, Grantham Research Institute on Climate Change and the Environment.
    10. Zhihan Cui & Geoffrey Heal & Howard Kunreuther, 2020. "Covid-19, Shelter-In Place Strategies and Tipping," NBER Working Papers 27124, National Bureau of Economic Research, Inc.
    11. Sungmin Kang & Younkue Na, 2022. "A Study on Conformity Appeal Attributes and Social Contagion of Beauty-Focused One-Person Media in Sustainable E-Commerce," Sustainability, MDPI, vol. 14(10), pages 1-16, May.
    12. Geoffrey Heal & Howard Kunreuther, 2011. "Tipping Climate Negotiations," NBER Working Papers 16954, National Bureau of Economic Research, Inc.
    13. Shafran, Aric P. & Lepore, Jason J., 2011. "Subsidization to induce tipping," Economics Letters, Elsevier, vol. 110(1), pages 32-35, January.
    14. Robert Hahn & Robert Ritz, 2014. "Optimal Altruism in Public Good Provision," Cambridge Working Papers in Economics 1403, Faculty of Economics, University of Cambridge.
    15. Pakhtigian, Emily L. & Dickinson, Katherine L. & Orgill-Meyer, Jennifer & Pattanayak, Subhrendu K., 2022. "Sustaining latrine use: Peers, policies, and sanitation behaviors," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 223-242.
    16. Heggedal, Tom-Reiel & Helland, Leif, 2014. "Platform selection in the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 168-177.
    17. Diane Coyle, 2016. "The Political Economy of National Statistics," Economics Discussion Paper Series 1603, Economics, The University of Manchester.
    18. Stephan Kroll & Aric P. Shafran, 2018. "Spatial externalities and risk in interdependent security games," Journal of Risk and Uncertainty, Springer, vol. 56(3), pages 237-257, June.
    19. Zimmerman, Brianne R. & Collins, Alan R. & Lacombe, Don, 2017. "Analyzing the Spatial Distribution of NRCS Conservation Programs in West Virginia," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258378, Agricultural and Applied Economics Association.
    20. Van Parys, Jessica & Ash, Elliott, 2018. "Sequential decision-making with group identity," Journal of Economic Psychology, Elsevier, vol. 69(C), pages 1-18.
    21. AJ Bostian & David Goldbaum, 2016. "Emergent Coordination among Competitors," Working Paper Series 36, Economics Discipline Group, UTS Business School, University of Technology, Sydney.

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    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other

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