Local Coordination and the Geometry of Social Networks

TL;DR

This paper investigates how the structure of social networks influences agents' ability to coordinate locally, revealing geometric conditions that determine the efficiency of outcomes in coordination games.

Contribution

It introduces a geometric condition on network structure that characterizes when near-perfect coordination efficiency is achievable in social networks.

Findings

Network geometry affects coordination efficiency.

Certain network structures allow near-perfect coordination.

Some networks inherently limit welfare due to structural constraints.

Abstract

We study agents playing a pure coordination game on a large social network. Agents are restricted to coordinate locally, without access to a global communication device, and so different regions of the network will converge to different actions, precluding perfect coordination. We show that the extent of this inefficiency depends on the network geometry: on some networks, near-perfect efficiency is achievable, while on others welfare is strictly bounded away from the optimum. We provide a geometric condition on the network structure that characterizes when near-efficiency is attainable. On networks in which it is unattainable, our results more generally preclude high correlations between outcomes in a large spectrum of dynamic games.