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Waiting for my neighbors

Author

Listed:
  • Murto, Pauli
  • Gordon, Sidartha
Abstract
We introduce a neighborhood structure in waiting games where the players decide when to``stop" (exit a market, adopt a technology). The payoff of stopping increases each time a neighbor stops. We show that the dynamic evolution of the network starkly depends on initial parameters and can take the form of either a shrinking network, where players at the edges stop first, or a fragmenting network where interior players stop first making the network split up in smaller ones over time. We find that, in addition to the coordination inefficiency standard in waiting games, the neighbourhood structure gives rise to two other inefficiencies, the first linked to the order of exit and the second to the final distribution of remaining nodes. We consider subsidy programs aimed at correcting these inefficiencies.

Suggested Citation

  • Murto, Pauli & Gordon, Sidartha, 2018. "Waiting for my neighbors," CEPR Discussion Papers 12834, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12834
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    Cited by:

    1. Gary Biglaiser & Jacques Crémer & André Veiga, 2020. "Migration between Platforms," CESifo Working Paper Series 8185, CESifo.
    2. Guang Tian & Xiaoxue Du & Fangbin Qiao & Andres Trujillo-Barrera, 2021. "Technology Adoption and Learning-by-Doing: The Case of Bt Cotton Adoption in China," JRFM, MDPI, vol. 14(11), pages 1-13, November.
    3. Jacques Crémer & Gary Biglaiser & André Veiga, 2022. "Should I stay or should I go? Migrating away from an incumbent platform," Post-Print hal-03792918, HAL.
    4. Crémer, Jacques & Biglaiser, Gary & Veiga, André, 2022. "Should I stay or should I go? Migrating away from an incumbent platform," TSE Working Papers 21-1281, Toulouse School of Economics (TSE).
    5. Biglaiser, Gary & Crémer, Jacques & Veiga, Andre, 2022. "Should I stay or should I go? Migrating away from an incumbent platform," CEPR Discussion Papers 14496, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Waiting games; Networks; Inefficiencies;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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