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Sophisticated play by idiosyncratic agents

Author

Listed:
  • David Myatt
  • Chris Wallace

Abstract

Agents are drawn from a large population and matched to play a symmetric $2\times2$ coordination game, the payoffs of which are perturbed by agent-specific heterogeneity. Individuals observe a (possibly sampled) history of play, which forms the initial hypothesis for an opponent's behaviour. Using this hypothesis as a starting point, the agents iteratively reason toward a Bayesian Nash equilibrium. When sampling is complete and the noise becomes vanishingly small, a single equilibrium is played almost all the time. A necessary and sufficient condition for selection, shown to be closely related (but not identical) to risk-dominance, is derived. When sampling is sufficiently incomplete, the risk-dominant equilibrium is played irrespective of the history observed. Copyright Springer Verlag Berlin/Heidelberg 2003

Suggested Citation

  • David Myatt & Chris Wallace, 2003. "Sophisticated play by idiosyncratic agents," Journal of Evolutionary Economics, Springer, vol. 13(3), pages 319-345, August.
    • Handle: RePEc:spr:joevec:v:13:y:2003:i:3:p:319-345
    DOI: 10.1007/s00191-003-0156-x
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    Cited by:

    1. Nax, Heinrich Harald & Newton, Jonathan, 2022. "Deep and shallow thinking in the long run," Theoretical Economics, Econometric Society, vol. 17(4), November.

    More about this item

    Keywords

    Sampling; Risk-dominance; Sophisticated play; Idiosyncrasy; Anticipation;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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