Dynamic coordination with network externalities: procrastination can be efficient

• Autor(a) principal: Angeli, Deivis
• Data de Publicação: 2018
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
• Texto Completo: http://hdl.handle.net/10438/24023
• topic: Dynamic coordination; Network externalities; Behavioral economics; Coordenação dinâmica; Externalidades de rede; Economia comportamental; Economia; Comportamento humano; Economia - Aspectos psicológicos; Redes sociais - Aspectos sociais

I analyze a dynamic coordination model under quasi-hyperbolic discounting. The main result is that present bias can induce a society to coordinate efficiently. When considering a transition from network A to B, higher present bias induces individuals to ask for higher relative quality of B, which is also what the central planner dictates, but for different reasons. Present biased agents overvalue relative quality, as positive externalities coming from more individuals in network B are more distant in the future, because transitioning takes time. The planner's motives are the negative externalities inflicted on agents 'stuck' in A during a transition.