Migration and the evolution of conventions
AbstractThis paper analyzes an evolutionary model where agents are locally matched to playa coordination game and can adjust both their strategy and location. Their decisions are subject to friction, so that an agent who migrates to a different location may be unable to adjust her strategy optimally to the new environment. A condition on off-equilibrium payoffs introduced by Aumann (1993) plays a major role in our characterization (for general coordination games) of the long-run outcomes. For the particular 2 x 2 case, this condition (which is unrelated to risk dominance) implies that the possibility of medium term simultaneous co-existence of conventions at different locations depends on whether the game is of "pure" coordination (where co-existence is always possible) or of the stag'-hunt type (where it is not). When we introduce noise (Le. mutations) into the model, this distinction continuous to play a crucial role in the selection of the long'-run equilibria: for large friction, both equilibria are stochastically stable in the former case, whereas only the efficient one is so in the latter.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1996-23.
Length: 36 pages
Date of creation: Dec 1996
Date of revision:
Publication status: Published by Ivie
Migration; evolution; conventions;
Other versions of this item:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
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- Oechssler, Jorg, 1997.
"Decentralization and the coordination problem,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 32(1), pages 119-135, January.
- Farrell, Joseph, 1988. "Communication, coordination and Nash equilibrium," Economics Letters, Elsevier, vol. 27(3), pages 209-214.
- Binmore, Ken & Samuelson, Larry, 1997. "Muddling Through: Noisy Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 74(2), pages 235-265, June.
- Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
- Ellison, Glenn, 1993.
"Learning, Local Interaction, and Coordination,"
Econometric Society, vol. 61(5), pages 1047-71, September.
- Dieckmann, Tone, 1999. "The evolution of conventions with mobile players," Journal of Economic Behavior & Organization, Elsevier, vol. 38(1), pages 93-111, January.
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