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Selecting Equilibria using Best-Response Dynamics

Author

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  • Vincent Boucher

Abstract

I propose a simple simulation procedure for large games with multiple equilibria. The simulation procedure is based on a best-response dynamic. The implied equilibrium selection mechanism is intuitive: more stable equilibria are selected with higher probability.

Suggested Citation

  • Vincent Boucher, 2017. "Selecting Equilibria using Best-Response Dynamics," Cahiers de recherche 1709, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
    • Handle: RePEc:lvl:crrecr:1709
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    File URL: http://www.crrep.ca/sites/crrep.ca/files/fichier_publications/crrep-2017-09.pdf
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    References listed on IDEAS

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    1. Glenn Ellison, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(1), pages 17-45.
    2. , & , P., 2014. "Refinements of Nash equilibrium in potential games," Theoretical Economics, Econometric Society, vol. 9(3), September.
    3. Yann Bramoullé & Andrea Galeotti & Brian Rogers, 2016. "The Oxford Handbook of the Economics of Networks," Post-Print hal-01447842, HAL.
    4. repec:hal:spmain:info:hdl:2441/5rkqqmvrn4tl22s9mc4ao8ocg is not listed on IDEAS
    5. Yann Bramoullé & Andrea Galeotti & Brian Rogers, 2016. "The Oxford Handbook of the Economics of Networks," Post-Print hal-03572533, HAL.
    6. Alfred Galichon & Marc Henry, 2011. "Set Identification in Models with Multiple Equilibria," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(4), pages 1264-1298.
    7. Govindan, Srihari & Wilson, Robert B., 2005. "Refinements of Nash Equilibrium," Research Papers 1897, Stanford University, Graduate School of Business.
    8. repec:hal:wpspec:info:hdl:2441/5rkqqmvrn4tl22s9mc4ao8ocg is not listed on IDEAS
    9. Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(1), pages 147-165.
    10. Ui, Takashi, 2001. "Robust Equilibria of Potential Games," Econometrica, Econometric Society, vol. 69(5), pages 1373-1380, September.
    11. Jovanovic, Boyan, 1989. "Observable Implications of Models with Multiple Equilibria," Econometrica, Econometric Society, vol. 57(6), pages 1431-1437, November.
    12. repec:dau:papers:123456789/5724 is not listed on IDEAS
    13. Kim, Youngse, 1996. "Equilibrium Selection inn-Person Coordination Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 203-227, August.
    14. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Torsten Heinrich & Yoojin Jang & Luca Mungo & Marco Pangallo & Alex Scott & Bassel Tarbush & Samuel Wiese, 2023. "Best-response dynamics, playing sequences, and convergence to equilibrium in random games," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(3), pages 703-735, September.
    2. Vincent Boucher, 2017. "The Estimation of Network Formation Games with Positive Spillovers," Cahiers de recherche 1710, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
    3. Torsten Heinrich & Yoojin Jang & Luca Mungo & Marco Pangallo & Alex Scott & Bassel Tarbush & Samuel Wiese, 2021. "Best-response dynamics, playing sequences, and convergence to equilibrium in random games," Papers 2101.04222, arXiv.org, revised Nov 2022.
    4. Pangallo, Marco & Heinrich, Torsten & Jang, Yoojin & Scott, Alex & Tarbush, Bassel & Wiese, Samuel & Mungo, Luca, 2021. "Best-Response Dynamics, Playing Sequences, And Convergence To Equilibrium In Random Games," INET Oxford Working Papers 2021-23, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    5. Boucher, Vincent, 2020. "Equilibrium homophily in networks," European Economic Review, Elsevier, vol. 123(C).

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    More about this item

    Keywords

    Potential Games; Equilibrium Selection Mechanism; Basin of Attraction; Coordination Games;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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