Chen, Chia-Hui

Ishida, Junichiro

A group of individuals, with a potential conflict of interest, face a choice amongalternatives. There is a network externality such that the chosen alternative yields valueonly if sufficiently many individuals get on board. Their preferences for each alternativeand the benefit derived from a successfully formed network are known only privately andmight vary between the players who determine whether to make their choices early orlate. We characterize the equilibrium timing of adoption as well as the efficient timingwhich maximizes the total expected payoff. We also show that the efficient timing ofadoption can be implemented by a simple fee scheme. The analysis gives an insight intowhy consensus is often hard-won in some societies and suggests a potential role of socialnorms in improving the efficiency

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Seeking Harmony Amidst Diversity : Consensus Building with Network Externalities

http://www.iser.osaka-u.ac.jp/library/dp/2011/DP0826.pdf

Seeking Harmony Amidst Diversity : Consensus Building with Network Externalities

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Osaka University Knowledge Archive