Unfolding social hierarchies in large population games

Abstract

Consider a large (continuum) population of finitely-lived agents organized in hierarchical levels.Every period, agents are matched to play a certain symmetric game. On the basis of the payoffsobtained, a certain p-fraction of those who performed best at each level are promoted upwords. Onthe other hand, newcomers replacing those who die every period enter at the lowest level andimitate unbiasedly (but subject to noise) the actions adopted at the highest one. In this context, the (unique) long-run behavior of the system is fully characterized for the wholeclass of 2x2 coordination games. The results crucially depend on the institutional parameter p(which refelcts how hierarchical - or selective - the society is) and on a purely ordinal criterion onthe payoffs of the game. In particular, efficent (or inefficent behaviour) may prevail in the long run -even when risk-dominated - if promotion in society is (or, respectively, is not) selective enough.Social hierarchies, large population games