Social Reinforcement: Cascades, Entrapment and Tipping

20 Pages Posted: 5 Nov 2007 Last revised: 10 Aug 2022

See all articles by Geoffrey M. Heal

Geoffrey M. Heal

Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER)

Howard Kunreuther

National Bureau of Economic Research (NBER); University of Pennsylvania - Wharton Risk Management and Decision Processes Center

Multiple version iconThere are 2 versions of this paper

Date Written: November 2007

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

Heal, Geoffrey M. and Kunreuther, Howard C. and Kunreuther, Howard C., Social Reinforcement: Cascades, Entrapment and Tipping (November 2007). NBER Working Paper No. w13579, Available at SSRN: https://ssrn.com/abstract=1027198

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Howard C. Kunreuther

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