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The Principle of Minimum Differentiation Revisited: Return of the Median Voter

Working paper
Author/s: 
Nobuyuki Hanaki, Emily Tanimura, Nicolaas J. Vriend
Issue number: 
2016.37
Series: 
Documents de travail du Centre d'Economie de la Sorbonne
Publisher: 
Centre d'Economie de la Sorbonne
Year: 
2016
Working Paper [1]
We study a linear location model (Hotelling, 1929) in which n (with n ≥ 2) boundedly rational players follow (noisy) myopic best-reply behavior. We show through numerical and mathematical analysis that such players spend almost all the time clustered together near the center, re-establishing the “Principle of Minimum Differentiation” that had been discredited by equilibrium analyses. Thus, our analysis of the best-response dynamics shows that when considering market dynamics as well as their policy and welfare implications, it may be important to look beyond equilibrium analyses.
Tags: 
Game Theory & Graphs [2]
Social Choice [3]

Source URL:http://coalitiontheory.net/content/principle-minimum-differentiation-revisited-return-median-voter

Links
[1] https://halshs.archives-ouvertes.fr/halshs-01317991/document [2] http://coalitiontheory.net/research-areas/game-theory-graphs [3] http://coalitiontheory.net/research-areas/social-choice