IMITATION AND COORDINATION IN SMALL‐WORLD NETWORKS

We study aggregate behaviour in a setting where individuals repeatedly interact via a network to play a minimum‐effort (stag hunt) game. Of interest is whether play converges on the Pareto‐optimal or risk‐dominant outcome. We contrast the best‐reply dynamic with the imitate‐the‐best dynamic. We also contrast forms of lattice, small‐world and random networks. Our main finding is that play is far more likely to converge on the Pareto‐optimal outcome if individuals learn by imitation. We find that play in small‐world networks is similar to that in a regular network. Copyright © 2014 John Wiley & Sons, Ltd.