The evolution of conventions with mobile players

This paper analyzes the evolution of conventions in a society with local in teraction and mobile players. Three innovative aspects are introduced: Impe rfect observability of play outside a player's home location, friction in t he strategy adjustment process, and restricted mobility. It is shown that, if mobility is unrestricted, only efficient conventions are stochastically stable. If there are barriers on mobility, the coexistence of different con ventions can be observed. While imperfect observability and friction alone cannot prevent society from reaching an overall efficient outcome, restrict ed mobility can. (C) 1999 Elsevier Science B.V. All rights reserved.