The dark side of friendship: envy

Abstract

This paper studies the effect of social relations on the convergence to the effcient equilibrium in a 2x2 coordination game. We employ a 2x2 factorial design in which we explore two different games with asymmetric payoffs and two matching protocols: "friends" versus "strangers". In the first game payoffs of the worse off player are the same in the two equilibria, whereas in the second game, this player must sacrifice her own payoff for achieving the efficient equilibrium. Results show that "strangers" coordinate more frequently in the efficient equilibrium than "friends" in both games. Regarding network measures, (such us degree in, degree out and betweenness) they are all positively correlated with the strategy which leads to the efficient outcome except clustering. In addition, envy is a salient factor in explaining efficient convergence.