Stochastic adaptation in finite games played by heterogeneous populations
AbstractWe analyze stochastic adaptation in finite n-player games played by heterogeneous populations containing best repliers, better repliers, and imitators. Individuals select strategies by applying a personal learning rule to a sample from a finite history of past play. We give sufficient conditions for convergence to minimal closed sets under better replies and selection of a Pareto dominant such set. Finally, we demonstrate that the stochastically stable states are sensitive to the sample size by showing convergence to the risk-dominant equilibrium for sufficiently small sample size and to the Pareto-dominant equilibrium for sufficiently large sample size in 2x2 coordination games.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Dynamics and Control.
Volume (Year): 33 (2009)
Issue (Month): 8 (August)
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Web page: http://www.elsevier.com/locate/jedc
Heterogeneous agents Markov chain Stochastic stability Pareto dominance Risk dominance;
Other versions of this item:
- Josephson, Jens, 2001. "Stochastic Adaptation in Finite Games Played by Heterogeneous Populations," Working Paper Series in Economics and Finance 475, Stockholm School of Economics.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
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