Abstract

http://ssrn.com/abstract=2292124
 
 

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Learning to Coordinate in Social Networks


Pooya Molavi


University of Pennsylvania - School of Engineering & Applied Science

Ceyhun Eksin


University of Pennsylvania - School of Engineering & Applied Science

Alejandro Ribeiro


University of Pennsylvania - School of Engineering & Applied Science

Ali Jadbabaie


University of Pennsylvania - Department of Electrical and Systems Engineering

July 10, 2013


Abstract:     
We study a repeated game in which a group of players attempt to coordinate on a desired, but only partially known, outcome. The desired outcome is represented by an unknown state of the world. Agents' stage payoffs are represented by a quadratic utility function that captures the kind of trade-off exemplified by the Keynesian beauty contest: each agent's stage payoff is decreasing in the distance between her action and the unknown state; it is also decreasing in the distance between her action and the average action taken by other agents. The agents thus have the incentive to correctly estimate the state while trying to coordinate with and learn from others. We show that myopic but Bayesian agents who repeatedly play this game and observe the actions of their neighbors over a network (that satisfies some weak connectivity condition) eventually succeed in coordinating on a single action. The agents also asymptotically receive similar payoffs in spite of differences in the quality of their information. Finally, we show that if the agents' private observations are not functions of the history of the game, then the private observations are optimally aggregated in the limit. Therefore, agents asymptotically coordinate on choosing the best estimate of the state given the aggregate information available throughout the network.

Number of Pages in PDF File: 32

Keywords: Learning, coordination games, social networks

JEL Classification: C73, D83, D85

working papers series


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Date posted: July 11, 2013  

Suggested Citation

Molavi, Pooya and Eksin, Ceyhun and Ribeiro, Alejandro and Jadbabaie, Ali, Learning to Coordinate in Social Networks (July 10, 2013). Available at SSRN: http://ssrn.com/abstract=2292124 or http://dx.doi.org/10.2139/ssrn.2292124

Contact Information

Pooya Molavi (Contact Author)
University of Pennsylvania - School of Engineering & Applied Science ( email )
3330 Walnut Street
L475 Levine Hall
Philadelphia, PA 19104
United States
215-834-7153 (Phone)
HOME PAGE: http://www.seas.upenn.edu/~pooya/
Ceyhun Eksin
University of Pennsylvania - School of Engineering & Applied Science ( email )
Philadelphia, PA
United States
Alejandro Ribeiro
University of Pennsylvania - School of Engineering & Applied Science ( email )
Philadelphia, PA
United States
Ali Jadbabaie
University of Pennsylvania - Department of Electrical and Systems Engineering ( email )
200 South 33rd Street
Moore Bldg Room 203
Philadelphia, PA 19104
United States
215 898-8105 (Phone)
215 573-2068 (Fax)
HOME PAGE: http://www.seas.upenn.edu/~jadbabai
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