Many economic models use a continuum of negligible agents to avoid considering one person's effect on aggregate characteristics of the economy. Along with a continuum of agents, these models often incorporate a sequence of independent shocks and random matchings. Despite frequent use of such...

Numerous economic models employ a continuum of negligible agents with a sequence of idiosyncratic shocks and random matchings. Several attempts have been made to build a rigorous mathematical justification for such models, but these attempts have left many questions unanswered. In this paper, we...

Individuals are randomly matched to play a <InlineEquation ID="IEq1"> <EquationSource Format="TEX">$$2\times 2$$</EquationSource> <EquationSource Format="MATHML"> <math xmlns:xlink="http://www.w3.org/1999/xlink"> <mrow> <mn>2</mn> <mo>×</mo> <mn>2</mn> </mrow> </math> </EquationSource> </InlineEquation> coordination game where the Pareto efficient and risk dominant equilibria differ. Players choose strategies by imitating the strategy of the most successful individual they observe. So, while individuals interact globally,...</equationsource></equationsource></inlineequation>