Working Paper: CEPR ID: DP7279
Authors: Michel Le Breton; Shlomo Weber
Abstract: In this note we introduce a general class of games where the payoff of every player are affected by her intrinsic taste for available strategic choices; intensity of her dyadic social interactions of with others in the peer group; and conformity effect. We show, that if the dyadic social influences are symmetric and the conformity effect is identical for all players, every game in our class admits a Nash equilibrium in pure strategies. Our proof relies on the fact that our game is potential (Rosenthal (1973), Monderer and Shapley (1996)). We also illustrate the universality of our result through a large spectrum of applications in economics, political science and sociology.
Keywords: conformity effect; dyadic externalities; nash equilibria; potential games; social interactions
JEL Codes: C72; D85
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| intrinsic preferences (D11) | players' payoffs (C72) |
| dyadic social externalities (D62) | players' payoffs (C72) |
| conformity effects (C92) | players' payoffs (C72) |
| symmetric dyadic social externalities + conformity effects (D71) | Nash equilibrium in pure strategies (C72) |
| intrinsic preferences + dyadic social externalities + conformity effects (C92) | Nash equilibrium in pure strategies (C72) |