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Does Noise Undermine The First-Mover Advantage? An Evolutionary Analysis Of Bagwell'S Example

Author

Listed:
  • JÖRG OECHSSLER

    (Department of Economics, University of Bonn, Adenauerallee 24, 53113 Bonn, Germany)

  • KARL H. SCHLAG

    (Department of Economics, European University Institute, Via dei Roccettini 9, 50016 San Domenico di Fiesole, Italy)

Abstract

Bagwell (1995) considered a simple Stackelberg-type game in which one player benefits from the other's ability to observe his move, assuming they play the unique subgame perfect equilibrium. He showed that introducing noise in the observability of the move eliminates that equilibrium, and thus the advantage. Van Damme and Hurkens (1997) objected that the noisy game also has a mixed strategy equilibrium close to the pure strategy one Bagwell had eliminated. However, we analyse the noisy game with a wide variety of evolutionary and learning dynamics, and find that almost all admit the no-first-mover-advantage equilibrium as a possible outcome, and often they select it uniquely.

Suggested Citation

  • Jörg Oechssler & Karl H. Schlag, 2000. "Does Noise Undermine The First-Mover Advantage? An Evolutionary Analysis Of Bagwell'S Example," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 83-96.
    • Handle: RePEc:wsi:igtrxx:v:02:y:2000:i:01:n:s0219198900000056
    DOI: 10.1142/S0219198900000056
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    Cited by:

    1. Guth, Werner & Muller, Wieland & Spiegel, Yossi, 2006. "Noisy leadership: An experimental approach," Games and Economic Behavior, Elsevier, vol. 57(1), pages 37-62, October.

    More about this item

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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