On the role of network structure in learning to coordinate with bounded rationality

Abstract

Many socioeconomic phenomena, such as technology adoption, collaborative problem-solving, and content engagement, involve a collection of agents coordinating to take a common action, aligning their decisions to maximize their individual goals. We consider a model for networked interactions where agents learn to coordinate their binary actions under a strict bound on their rationality. We first prove that our model is a potential game and that the optimal action profile is always to achieve perfect alignment at one of the two possible actions, regardless of the network structure. Using a stochastic learning algorithm known as Log Linear Learning, where agents have the same finite rationality parameter, we show that the probability of agents successfully agreeing on the correct decision is monotonically increasing in the number of network links. Therefore, more connectivity improves the accuracy of collective decision-making, as predicted by the phenomenon known as Wisdom of Crowds. Finally, we show that for a fixed number of links, a regular network maximizes the probability of success. We conclude that when using a network of irrational agents, promoting more homogeneous connectivity improves the accuracy of collective decision-making.