Coordination Games and Local Interactions: A Survey of the Game Theoretic Literature

Abstract: We survey the recent literature on coordination games, where there is a conflictbetween risk dominance and payoff dominance. Our main focus is on models of local interactions, where players only interact with small subsets of the overall population rather than with society as a whole. We use Ellison’s [1] Radius-Coradius Theorem to present prominent results on local interactions. Amongst others, we discuss best reply learning in a global- and in a local- interaction framework and best reply learning in multiple location models and in a network formation context. Further, we discuss imitation learning in a localandin a global- interactions setting.