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Strategic Network Abandonment

Socio-economic networks, from cities and firms to collaborative projects, often appear resilient for long periods before experiencing rapid, cascading decline as participation erodes. We explain such dynamics through a framework of strategic network abandonment, in which interconnected agents choose activity levels in a network game and remain active only if participation yields higher utility than an improving outside option. As outside opportunities rise, agents exit endogenously, triggering equilibrium readjustments that may either dissipate locally or propagate through the network. The resulting decay dynamics are governed by the strength of strategic complementarities, measuring how strongly an agent's incentives depend on the actions of others. When complementarities are weak, decay follows a heterogeneous threshold process analogous to bootstrap percolation: failures are driven by local neighborhoods, vulnerable clusters can be identified ex ante, and large cascades emerge only through bottom-up accumulation of fragility. When complementarities are strong, departures propagate globally, producing rupture-like dynamics characterized by metastable plateaus, abrupt system-w