When do Organizations Arise from Coordination?

Dai, Liang; Yang, Ming

doi:10.2139/ssrn.3051192

Cited by 2 publications

(2 citation statements)

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“…In particular, Sákovics and Steiner (2012) studied the policy impact of a global game with a continuum of agents who value an agent-weighted average action. However, a number of papers have examined cases in which there are multiple coordination sets but with different parameterized classes of payoffs than ours -including Dai and Yang (2019), Abadi and Brunnermeier (2018), Drozd andSerrano-Padial (2018), andSerrano-Padial (2018). 5 Compared to this literature, the network structure introduces heterogeneity through the agents' network positions.…”

Section: Introductionmentioning

confidence: 99%

“…They show that the risk-dominant equilibrium is selected in these games.5 In particular,Dai and Yang (2019) studied a similar model to that ofSákovics and Steiner (2012), in which the continuum of agents carries private information regarding idiosyncratic costs of adoption, incorporating multiple cutoffs in the noiseless limit. In this setting, the authors focus on the role of organizations in mitigating miscoordination.…”

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confidence: 99%

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Social Connectedness and Local Contagion

Leister¹,

Zénou

Zhou

2021

The Review of Economic Studies

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We study a coordination game among agents in a network. The agents choose whether to take action (e.g. adopting a new technology) in an uncertain environment that yields increasing value in the actions of neighbours. We develop an algorithm that fully partitions the network into communities (coordination sets) within which agents have the same propensity to adopt. Our main finding is that a novel measure of network connectedness, which we term “social connectedness,” determines the propensity to adopt for each agent. Social connectedness captures both the number of links each agent has within her community (interconnectedness) as well as the number of links she has with members of other communities who have a higher propensity to adopt (embeddedness). There is a single coordination set if and only if the network is balanced—that is, the average degree of each subnetwork is no larger than the average degree of the network. Finally, we demonstrate that contagion is localized within coordination sets, such that a shock to an agent uniformly affects this agent and all members of her coordination set but has no impact on the other agents in the network.

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