This paper analyzes the equilibrium play in a random matching model with a changing environment. Under myopic decision making, players adopt imitation strategies similar to those observed in evolutionary models with sampling from past play in the population. If the players are patient, equilibrium strategies display elements of experimentation in addition to imitation. If the changes in the environment are infrequent enough, these strategies succeed in coordinating almost all of the players on the dominant action almost all of the time. The myopic rules, on the other hand, result in mis-coordination for a positive fraction of time.
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Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number
1275.
Length: Date of creation: Oct 1999 Date of revision: Handle: RePEc:nwu:cmsems:1275
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Find related papers by JEL classification: C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
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