Coordination and Evolutionary Network Formation with Asymmetric Link Costs: Part One

We analyze a dynamic implication of an evolutionary process in a population where both actions and network structures changes over time. At every period, a coordination game is played by players who are linked with each other. An asymmetric cost of a link is incorporated. Under this setting each player myopically adopts with its circumstance consisting of the network structure and the action profile. In a stochastically stable state there are link cost patterns such that all players play a pareto dominant equilibrium strategy of coordination game. This is the most different result from a standard stochastic evolutionary models that selects a risk dominant equilibrium.