Nikolas Tsakas

Imitating the Most Successful Neighbor in Social Networks

We study a model of observational learning in a set of agents who are connected through a social network. The agents face identical decision problems under uncertainty and update their choices myopically, imitating the choice of their most successful neighbor. We show that in finite networks, regardless of the network structure, the population converges to a monomorphic steady state, i.e., one at which every agent chooses the same action, and it cannot be predicted which this action will be. In arbitrarily large networks with bounded neighborhoods, an action is diffused to the whole population either if it is the only one initially chosen by a non-negligible share of the population, or if the payoffs satisfy a sufficient condition. Without the assumption of bounded neighborhoods, (i) an action can survive even if only one agent chooses it initially, and (ii) there may exist steady states that are not monomorphic.

Diffusion by Imitation: The Importance of Targeting Agents

We study the optimal targeting strategy of a planner who seeks to maximize the diffusion of an action in a network where agents imitate successful past behavior of their neighbors. We find that the optimal targeting strategy depends on two parameters: (i) the likelihood of the action being more successful than its alternative and (ii) the planners patience. More specifically, when the planners preferred action has higher probability of being more successful than its alternative, then the optimal strategy for an infinitely patient planner is to concentrate all the targeted agents in one connected group; whereas when this probability is lower it is optimal to spread them uniformly around the network. Interestingly, for a very impatient planner, the optimal targeting strategy is exactly the opposite. Our results highlight the importance of knowing a societys exact network structure for the efficient design of targeting strategies, especially in settings where the agents are positionally similar.

Promoting cycling: development aspects in two different cities, Copenhagen and Patras

The problems caused by the extended use of private motor vehicles, tend to prove that it is indispensable to turn the attention to alternative, although vulnerable, transport modes. In order to encourage citizens to change their habits, appropriate conditions must be provided. In some European places, such as Copenhagen, Denmark, the conditions are already there and, by these, a high level of acceptance from the citizens is achieved. At the same time, in some other European cities, like Patras, Greece, conditions that encourage citizens to cycle or to walk, simply do not exist. The purpose of this paper is to recommend proposals for making Patras more bicycle friendly, based on the results of Copenhagen. A survey was carried out in Copenhagen (the so-called bicycle account), which revealed who the potential cyclists are, and what is the experience with cycle facilities. A multinomial logit model was then run, using as explanatory variables various personal characteristics, and the preferred mode of transport for different types of citizens was predicted. The results of this survey revealed the population groups that tend to prefer cycling and therefore constitute target groups for the future promotion of cycling. The existing situation for cyclists in Patras, Greece can be described as an absence of adequate facilities. A plan aiming at establishing bicycle tracks in a route connecting the city center to the University area was then proposed, together with the implementation of some other measures – on the basis of the Copenhagen experience – that assure the wide introduction of cycling in the city. The paper finally provides (i) useful guidelines regarding the factors that affect cycling conditions in Copenhagen and (ii) the plan for promoting cycling in Patras.

The effect of entry on R&D networks

We investigate the effect of potential entry on the formation and stability of R&D networks considering farsighted firms. We show that the presence of a potential entrant often alters the incentives of incumbent firms to establish an R&D link. In particular, incumbent firms may choose to form an otherwise undesirable R&D collaboration in order to deter the entry of a new firm. Moreover, an incumbent firm may refrain from establishing an otherwise desirable R&D collaboration, expecting to form a more profitable R&D link with the entrant. Finally, potential entry may lead an inefficient incumbent to exit the market. We also perform a welfare analysisand show that market and societal incentives are often misaligned.

Social Capital, Communication Channels and Opinion Formation

We study how different forms of social capital lead to different distributions of multidimensional opinions by affecting the channels through which individuals communicate. We develop a model to compare and contrast the evolution of opinions between societies whose members communicate through bonding associations (i.e., which bond similar people together) and societies where communication is through bridging associations (i.e., which bridge the gap among different people). Both processes converge towards opinion distributions where there are groups within which there is consensus in all issues. Bridging processes are more likely to lead to society-wide consensus and converge to distributions that have, on average, fewer opinion groups. The latter result holds even when the confidence bound that allows successful communication in the bridging process is much smaller than the respective bound in the bonding process.

Electoral Competition with Third Party Entry in the Lab

Electoral competition between two vote-share maximizing candidates in the context of the unidimensional spatial model leads to platform convergence: both candidates end up proposing the ideal policy of the median voter. Palfrey (1984) famously argued that if third candidate entry is expected after the two main candidates choose their platforms, the unique equilibrium is such that the two main candidates locate substantially far from each other. By conducting a laboratory experiment, we put this popular idea to test, for the first time. We allow entry to take place with a probability p in [0,1] and we find that, indeed, the degree of polarization of the two main candidates’ platforms increases as third candidate entry becomes more likely to occur, providing strong evidence in support of Palfrey’s (1984) formal results and underlying intuition.

Communication and the Emergence of a Unidimensional World

We provide theoretical and experimental support on the emergence of a unidimensional world through communication. Both theoretical and experimental results suggest that when boundedly rational individuals communicate their opinions over multiple issues, disagreement can eventually be summarized on a unidimensional spectrum, even when imposing very little structure on the communication process. The presence of structured social networks is however crucial in determining whether an individual forms moderate or extreme views.

Beatable imitation in symmetric games with perturbed payoffs

In a recent paper, Duersch et al. (2012) showed that in a rather broad class of repeated symmetric two-player games, a player who uses the simple “imitate-if-better” heuristic cannot be subject to a money pump. In this paper, we extend the analysis to games with randomly perturbed payoffs and we show that this result is not robust to, even arbitrarily small, payoff perturbations. In particular, we provide a necessary and sufficient condition that characterizes the class of perturbed games in which the imitator can be subject to a money pump.