Bandwagon Effects and Long Run Technology Choice

Michihiro Kandori · Rafael Rob

70 citations0/0 files storedGames and Economic Behavior

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Game Theory and Applications Digital Platforms and Economics Evolutionary Game Theory and Cooperation

Abstract

We introduce a class of “bandwagon games” which generalizes the notion of network externalities when there are more than two competing technologies and various degrees of partial compatibilities among them. We then apply the stochastic evolutionary approach to this class of games. We determine the conditions under which aglobally pairwise risk-dominanttechnology is the long-run equilibrium (LRE). We also show the conditions under which one technology takes over another technology by directly switching consumers from the latter to the former (also calleddirect domination). Parametric examples illustrate the properties of the technology which is the LRE.Journal of Economic LiteratureClassification Numbers: C72, C73.

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References

1985Network externalities, competition, and compatibility 1993The Evolution of Conventions 1988A General Theory of Equilibrium Selection in Games 1993Learning, Mutation, and Long Run Equilibria in Games 1993Learning, Local Interaction, and Coordination 1989A General Theory of Equilibrium Selection in Games.1995p-Dominance and Belief Potential 1995Evolution of Equilibria in the Long Run: A General Theory and Applications

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