Working Paper: NBER ID: w12281
Authors: Geoffrey Heal; Howard Kunreuther
Abstract: We model tipping as a game-theoretic phenomenon and investigate the connection between supermodular games, tipping of equilibria and cascading, and apply the results to issues that arise in the context of homeland security and computer security. We show that tipping and cascading can occur in supermodular games and that "increasing differences" is a sufficient condition for tipping. Supermodularity and tipping of equilibria are closely related. We relate our results to Schelling's early work on tipping.
Keywords: supermodularity; tipping; cascading; game theory; security
JEL Codes: C72; D80; H23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| supermodularity (D10) | tipping (J33) |
| increasing differences in payoffs (C72) | tipping (J33) |
| tipping set of agents adopting a strategy change (C73) | shift to efficient equilibrium (D59) |
| tipping set of agents adopting a strategy change (C73) | induce others to follow suit (C92) |
| cascading effects initiated by one agent (C92) | subsequent changes by others (Y50) |
| cascading effects (F65) | new equilibrium (D59) |