In and out of Equilibrium II: Evolution in Repeated Games with Discounting and Complexity Costs
AbstractWe explore evolutionary dynamics for repeated games with small, but positive complexity costs. To understand the dynamics, we extend a folk theorem result by Cooper (1996) to continuation probabilities, or discount rates, smaller than 1. While this result delineates which payoffs can be supported by neutrally stable strategies, the only strategy that is evolutionarily stable, and has a uniform invasion barrier, is All D. However, with sufficiently small complexity costs, indirect invasions - but now through 'almost neutral' mutants - become an important ingredient of the dynamics. These indirect invasions include stepping stone paths out of full defection.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 12-089/I.
Date of creation: 06 Sep 2012
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repeated games; evolutionary game theory; complexity costs; indirect invasions; robustness against indirect invasions; neutrally stable strategy; evolutionarily stable strategy; iterated prisoners dilemma;
Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-22 (All new papers)
- NEP-EVO-2012-09-22 (Evolutionary Economics)
- NEP-GTH-2012-09-22 (Game Theory)
- NEP-HPE-2012-09-22 (History & Philosophy of Economics)
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.:
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