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Title: Existence of Pure Strategies Nash Equilibria in Social Interaction Games with Dyadic Externalities

Author(s): Michel Le Breton and Shlomo Weber

Publication Date: April 2009

Keyword(s): conformity effect, dyadic externalities, Nash equilibria, potential games and Social interactions

Programme Area(s): Public Economics

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.

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Bibliographic Reference

Le Breton, M and Weber, S. 2009. 'Existence of Pure Strategies Nash Equilibria in Social Interaction Games with Dyadic Externalities'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7279