Evolutionary Drift And Equilibrium Selection
AbstractThis paper develops an approach to equilibrium selection in game theory based on studying the learning process through which equilibrium is achieved. The differential equations derived frommodels of interactive learn-ing typically have stationary states that are not isolated. Instead, Nash equilibria that specify different out-of-equilibrium behavior appear in con-nected components of stationary states. The stability properties of these components can depend critically on the perturbations to which the system is subjected. We argue that it is then important to incorporate such drift into the model. A sufficient condition is provided for drift to create stationary states, with strong stability properties, near a component of equilibria. Applications to questions of forward and backward induction are developed.
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Bibliographic InfoPaper provided by ESRC Centre on Economics Learning and Social Evolution in its series ELSE working papers with number 049.
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Evolutionary Games; Cheap Talk; Stability; Drift;
Find related papers by JEL classification:
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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- Stefano Demichelis & Jörgen Weibull, 2009.
"Language, meaning and games A model of communication, coordination and evolution,"
- Stefano Demichelis & Jorgen W. Weibull, 2008. "Language, Meaning, and Games: A Model of Communication, Coordination, and Evolution," American Economic Review, American Economic Association, vol. 98(4), pages 1292-1311, September.
- Stefano Demichelis & Jörgen W. Weibull, 2007. "Language, meaning and games: a model of communication, coordination and evolution," Carlo Alberto Notebooks 61, Collegio Carlo Alberto.
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