Peer-Confirming Equilibrium

27 Pages Posted: 3 Jan 2017 Last revised: 24 Aug 2017

Elliot Lipnowski

University of Chicago - Department of Economics

Evan Sadler

Harvard University

Date Written: August 15, 2017


We can often predict the behavior of those closest to us more accurately than that of complete strangers, yet we routinely engage in strategic situations with both: our social network impacts our strategic knowledge. Peer-confirming equilibrium describes the behavioral consequences of this intuition in a noncooperative game. We augment a game with a network to represent strategic information: if two players are linked in the network, they have correct conjectures about each others' strategies. In peer-confirming equilibrium, there is common belief that players (i) behave rationally and (ii) correctly anticipate neighbors' play. In simultaneous-move games, adding links to the network always restricts the set of outcomes. In dynamic games, the outcome set may vary non-monotonically with the network because the actions of well-connected players help poorly-connected players coordinate. This solution concept provides a useful language for studying public good provision, highlights a new channel through which central individuals facilitate coordination, and delineates possible sources of miscoordination in protests and coups.

Keywords: networks, strategic uncertainty, conjectural equilibrium, forward induction

JEL Classification: D01, D85, C72, D74

Suggested Citation

Lipnowski, Elliot and Sadler, Evan, Peer-Confirming Equilibrium (August 15, 2017). Available at SSRN: or

Elliot Lipnowski

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

Evan Sadler (Contact Author)

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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