Endogenous selection of aspiring and rational rules in coordination games
AbstractThe paper studies an evolutionary model where players from a given population are randomly matched in pairs each period to play a co- ordination game. At each instant, a player can choose to adopt one of the two possible behavior rules, called the rational rule and the as- piring rule, and then take actions prescribed by the chosen rule. The choice between the two rules depends upon their relative performance in the immediate past. We show that there are two stable long run outcomes where either the rational rule becomes extinct and all play- ers in the population achieve full eciency, or that both the behavior rules co-exist and there is only a partial use of ecient strategies in the population. These ndings support the use of the aspiration driven behavior in several existing studies and also help us take a comparative evolutionary look at the two rules in retrospect.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5941.
Date of creation: 25 Nov 2007
Date of revision:
Co-evolution; Aspirations; Best-response; Random matching; Coordination games;
Other versions of this item:
- Marcin Dziubinski & Jaideep Roy, 2007. "Endogenous Selection of Aspiring and Rational rules in Coordination Games," CEDI Discussion Paper Series 07-14, Centre for Economic Development and Institutions(CEDI), Brunel University.
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-12-01 (All new papers)
- NEP-CBE-2007-12-01 (Cognitive & Behavioural Economics)
- NEP-EVO-2007-12-01 (Evolutionary Economics)
- NEP-GTH-2007-12-01 (Game Theory)
- NEP-LAB-2007-12-01 (Labour Economics)
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