Evolutionary Stability of First Price Auctions
AbstractThis paper studies the evolutionary stability of the unique Nash equilibrium of a first price sealed bid auction. It is shown that the Nash equilibrium is not asymptotically stable under payoff monotonic dynamics for arbitrary initial popu- lations. In contrast, when the initial population includes a continuum of strategies around the equilibrium, the replicator dynamic does converge to the Nash equilibrium. Simulations are presented for the replicator and Brown-von Neumann-Nash dynamics. They suggest that the convergence for the replicator dynamic is slow compared to the Brown-von Neumann-Nash dynamics.
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Bibliographic InfoPaper provided by Bielefeld University, Center for Mathematical Economics in its series Working Papers with number 435.
Length: 14 pages
Date of creation: Jun 2010
Date of revision:
Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-31 (All new papers)
- NEP-CMP-2010-07-31 (Computational Economics)
- NEP-EVO-2010-07-31 (Evolutionary Economics)
- NEP-GTH-2010-07-31 (Game Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hon-Snir, Shlomit & Monderer, Dov & Sela, Aner, 1998.
"A Learning Approach to Auctions,"
Journal of Economic Theory,
Elsevier, vol. 82(1), pages 65-88, September.
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