Coordination games , network formation , local interaction , equilibrium selection
Abstract:
A population of players is considered in which each player may select his neighbors in order to play a 2x2 coordination game with each of them. We analyze how the payoffs in the underlying coordination game effect the resulting equilibrium neighborhood resp. network structure. Depending on the size of the communication costs the resulting equilibrium networks may be characterized by bipartite graphs if the coordination game is of the Hawk/Dove type while networks show a tendency to build complete or disconnected graphs if neighbors play a pure coordination game.
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