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Contagion and State Dependent Mutations

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Author Info

  • Lee In Ho

    ()
    (Seoul National University and University of Southampton)

  • Szeidl Adam

    ()
    (Harvard University)

  • Valentinyi Akos

    ()
    (University of Southampton, Institute of Economics, Hungarian Academy of Sciences & CEPR)

Abstract

Early results of evolutionary game theory showed that the risk dominant equilibrium is uniquely selected in the long run under the best-response dynamics with mutation. Bergin and Lipman (1996) qualified this result by showing that for a given population size, the evolutionary process can select any strict Nash equilibrium if the probability of choosing a nonbest response is state-dependent. This paper shows that the unique selection of the risk dominant equilibrium is robust with respect to state dependent mutation in local interaction games. More precisely, for any given mutation structure there exists a minimum population size beyond which the risk dominant equilibrium is uniquely selected. Our result is driven by contagion and cohesion among players, which exist only in local interaction settings and favor the risk dominant strategy. Our result strengthens the equilibrium selection result of evolutionary game theory.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.

Volume (Year): 3 (2003)
Issue (Month): 1 (February)
Pages: 1-29

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Handle: RePEc:bpj:bejtec:v:advances.3:y:2003:i:1:n:2

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References

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  1. Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
  2. Glen Ellison, 2010. "Learning, Local Interaction, and Coordination," Levine's Working Paper Archive 391, David K. Levine.
  3. Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 387-424, July.
  4. Lawrence Blume, 1993. "The Statistical Mechanics of Best-Response Strategy Revision," Game Theory and Information 9307001, EconWPA, revised 26 Jan 1994.
  5. J. Bergin & B. Lipman, 2010. "Evolution with State-Dependent Mutations," Levine's Working Paper Archive 486, David K. Levine.
  6. Anderlini, Luca & Ianni, Antonella, 1996. "Path Dependence and Learning from Neighbors," Games and Economic Behavior, Elsevier, vol. 13(2), pages 141-177, April.
  7. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  8. Lee, In Ho & Valentinyi, Akos, 2000. "Noisy Contagion without Mutation," Review of Economic Studies, Wiley Blackwell, vol. 67(1), pages 47-56, January.
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Citations

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Cited by:
  1. Thomas Norman, 2003. "Step-by-Step Evolution with State-Dependent Mutations," Economics Series Working Papers 2003-W08, University of Oxford, Department of Economics.
  2. Thomas Norman, 2003. "The Evolution of Coordination under Inertia," Economics Series Working Papers 2003-W06, University of Oxford, Department of Economics.
  3. Simon Weidenholzer, 2010. "Coordination Games and Local Interactions: A Survey of the Game Theoretic Literature," Games, MDPI, Open Access Journal, vol. 1(4), pages 551-585, November.
  4. Sanjeev Goyal, 2003. "Learning in Networks: a survey," Economics Discussion Papers 563, University of Essex, Department of Economics.
  5. Thomas Norman, . "Step-by-Step Evolution with State-Dependent Mutations," Economics Papers 2003-W08, Economics Group, Nuffield College, University of Oxford.
  6. Weidenholzer, Simon, 2012. "Long-run equilibria, dominated strategies, and local interactions," Games and Economic Behavior, Elsevier, vol. 75(2), pages 1014-1024.
  7. Peski, Marcin, 2010. "Generalized risk-dominance and asymmetric dynamics," Journal of Economic Theory, Elsevier, vol. 145(1), pages 216-248, January.

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