University / Organisation : Grenoble-Alpes University

Paper or project ? paper

Title : NETWORKS, REPLICATOR DYNAMICS AND THE PROPAGATION OF IDIOSYNCRATIC SHOCKS

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Abstract : This paper develops a unified framework for the study of how intra-network relation can appears as propagation mechanism of idiosyncratic shocks. This network leads to a reduced replicator dynamic model with heterogeneous firms and particular evolutionary game that we call idiosyncratic game. Under the assumption that idiosyncratic shocks are followed by strategy change in firm, we provide a fairly characterization of the condition of propagation of idiosyncratic game, underlying the importance of network structure and intra-network relation as interaction relation and power relation. We show these types of idiosyncratic game can be characterized by a perfect information cooperation game, oriented by the firm with better power degree under certain condition, and almost always resulting in the least bad possible way for the latter.