We study a coordination game among agents on a network, who choose whether or not to take an action that yields value increasing in the actions of neighbors. In a standard global game setting, players receive noisy information of the technology's common state-dependent value. At the noiseless limit, equilibrium strategies are threshold strategies: each agent adopts if the signal received is above a certain cutoff value. We characterize properties of the cutoffs as a function of the network structure. This characterization allows to partition players into coordination sets, i.e., sets of players where all members take a common cutoff strategy and are path connected. We also show that there is a single coordination set (all players use the same strategies, so they perfectly coordinate) if and only if the network is balanced, i.e., the average degree of each subnetwork is no larger than the average degree of the network. Comparative statics exercises as well as welfare properties are investigated. We show that, in order to maximize aggregate welfare or adoption, the planner needs to target coordination sets and not individuals.

Presented by Matthew Leister, Monash University.

About School Seminar Series

School of Economics seminars are the main academic seminar series held on a Friday. These seminars are presented by guest researchers and enable School of Economics academics to network with other academics from around Australia and internationally.

Venue

Colin Clark Building (#39)
Room: 
105