American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Social Reinforcement: Cascades, Entrapment, and Tipping
American Economic Journal: Microeconomics
vol. 2,
no. 1, February 2010
(pp. 86–99)
Abstract
The actions of different agents sometimes reinforce each other. Examples are network effects and the threshold models used by sociologists as well as (Harvey) Leibenstein's "bandwagon effects." We model such situations as a game with increasing differences, and show that tipping of equilibria, cascading, and clubs with entrapment are natural consequences of this mutual reinforcement. If there are several equilibria, one of which Pareto dominates, then the inefficient equilibria can be tipped to the efficient one, a result of interest in the context of coordination problems. We characterize the smallest tipping set. (JEL C72, D80, D85, Z13)Citation
Heal, Geoffrey, and Howard Kunreuther. 2010. "Social Reinforcement: Cascades, Entrapment, and Tipping." American Economic Journal: Microeconomics, 2 (1): 86–99. DOI: 10.1257/mic.2.1.86JEL Classification
- C72 Noncooperative Games
- D80 Information, Knowledge, and Uncertainty: General
- D85 Network Formation and Analysis: Theory
- Z13 Economic Sociology; Economic Anthropology; Social and Economic Stratification
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