NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Social Reinforcement: Cascades, Entrapment and Tipping

Geoffrey Heal, Howard Kunreuther

NBER Working Paper No. 13579
Issued in November 2007
NBER Program(s):   EEE   PE

There are many social situations in which the actions of different agents reinforce each other. These include network effects and the threshold models used by sociologists (Granovetter, Watts) as well as Leibenstein's "bandwagon effects." We model such situations as a game with increasing differences, and show that tipping of equilibria as discussed by Schelling, cascading and Dixit's results on clubs with entrapment are natural consequences of this mutual reinforcement. If there are several equilibria, one of which Pareto dominates, then we show that the inefficient equilibria can be tipped to the efficient one, a result of interest in the context of coordination problems.

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Document Object Identifier (DOI): 10.3386/w13579

Published: Geoffrey Heal & Howard Kunreuther, 2010. "Social Reinforcement: Cascades, Entrapment, and Tipping," American Economic Journal: Microeconomics, American Economic Association, vol. 2(1), pages 86-99, February.

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