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Equilibrium Selection under Different Learning Modes in Supermodular Games

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  • Oddvar M. Kaarboe

    (University of Bergen)

  • Alexander F. Tieman

    ()
    (Vrije Universiteit Amsterdam)

Abstract

We apply the dynamic stochastic framework proposed by recent evolutionaryliterature to the class of strict supermodular games when two simplebehavior rules coexist in the population, imitation and myopic optimization.We assume that myopic optimizers are able to see how well their payoff doesrelative to what they can get in the stage game and therefore experimentmore in low payoff states. A clear-cut equilibrium selection result isobtained: the payoff dominant equilibrium emerges as the unique long runequilibrium. Furthermore, the expected waiting time until the payoffdominant equilibrium is reached is relatively short, even in the limit asthe population size grows large.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 99-061/1.

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Date of creation: 11 Aug 1999
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Handle: RePEc:dgr:uvatin:19990061

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Web page: http://www.tinbergen.nl

Related research

Keywords: Evolution; Imitation; Myopic Optimization; Payoff Dominant Equilibrium;

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  1. J. Bergin & B. Lipman, 2010. "Evolution with State-Dependent Mutations," Levine's Working Paper Archive 486, David K. Levine.
  2. Kandori Michihiro & Rob Rafael, 1995. "Evolution of Equilibria in the Long Run: A General Theory and Applications," Journal of Economic Theory, Elsevier, vol. 65(2), pages 383-414, April.
  3. Robson, Arthur J. & Vega-Redondo, Fernando, 1996. "Efficient Equilibrium Selection in Evolutionary Games with Random Matching," Journal of Economic Theory, Elsevier, vol. 70(1), pages 65-92, July.
  4. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  5. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, December.
  6. Vives, Xavier, 1990. "Nash equilibrium with strategic complementarities," Journal of Mathematical Economics, Elsevier, vol. 19(3), pages 305-321.
  7. Glen Ellison, 2010. "Learning, Local Interaction, and Coordination," Levine's Working Paper Archive 391, David K. Levine.
  8. Robles, Jack, 1998. "Evolution with Changing Mutation Rates," Journal of Economic Theory, Elsevier, vol. 79(2), pages 207-223, April.
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Cited by:
  1. Napel, Stefan, 2003. "Aspiration adaptation in the ultimatum minigame," Games and Economic Behavior, Elsevier, vol. 43(1), pages 86-106, April.
  2. Oddvar M. Kaarbøe & Alexander F. Tieman, 0000. "Equilibrium Selection in Games with Macroeconomic Complementarities," Tinbergen Institute Discussion Papers 99-096/1, Tinbergen Institute.
  3. Josephson, Jens, 2009. "Stochastic adaptation in finite games played by heterogeneous populations," Journal of Economic Dynamics and Control, Elsevier, vol. 33(8), pages 1543-1554, August.
  4. Burkhard Schipper, 2002. "Imitators and Optimizers in Cournot Oligopoly," Bonn Econ Discussion Papers bgse29_2002, University of Bonn, Germany.

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