Operations, Information and Decisions Papers
Document Type
Journal Article
Date of this Version
2-2010
Publication Source
American Economic Journal: Microeconomics
Volume
2
Issue
1
Start Page
86
Last Page
99
DOI
10.1257/mic.2.1.86
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.
Recommended Citation
Heal, G., & Kunreuther, H. (2010). Social Reinforcement: Cascades, Entrapment, and Tipping. American Economic Journal: Microeconomics, 2 (1), 86-99. http://dx.doi.org/10.1257/mic.2.1.86
Date Posted: 27 November 2017
This document has been peer reviewed.