Naive Learning and Game Play in a Dual Social Network Framework

We observe that people perform economic activities within the social setting of a small group, while they obtain relevant information from a broader source. We capture this feature with a dynamic interaction model based on two separate social networks. Individuals play a coordination game in an interaction network. Meanwhile, all individuals update their strategies via a naive learning process using information from a separate influence network through which information is disseminated. In each time period, the interaction and influence networks co-evolve, and the individuals’ strategies are updated through a modified French-DeGroot updating process. We show that through this updating process both network structures and players’ mixed strategies always reach a steady state. In particular, conformity occurs in the long run when the interaction cost is sufficiently low. We also analyse the influence exerted by a minority group on these outcomes.