Equilibrium Selection with Payoff-Dependent Mistakes
AbstractThis paper studies equilibrium selection via stochastic dynamics in the style of Young (Econometrica 61, 1993, 57-84), when the mistake probabilities are allowed to depend on their expected payoffs. Although any strict equilibrium can be selected with properly constructed state-dependent mistakes (Bergin and Lipman, Econometrica, 64, 1996, 943-956), reasonable assumptions on state dependence could produce a consistent equilibrium selection. The main analysis shows how payoff dependency and payoffs interact to determine a long-run equilibrium and characterizes the selection relating to the traditional notions of risk dominance, payoff dominance, and maxmin in 2x2 games
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Research Institute for Market Economy, Sogang University in its series Working Papers with number 1115.
Length: 22 pages
Date of creation: 2011
Date of revision:
Equilibrium selection; stochastic stability; coordination game; payoff dependent mistake;
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
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-28 (All new papers)
- NEP-GTH-2011-11-28 (Game Theory)
- NEP-MIC-2011-11-28 (Microeconomics)
- NEP-ORE-2011-11-28 (Operations Research)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yi, Kang-Oh, 2009. "Payoff-dependent mistakes and q-resistant equilibrium," Economics Letters, Elsevier, vol. 102(2), pages 99-101, February.
- Blume, Lawrence E., 2003.
"How noise matters,"
Games and Economic Behavior,
Elsevier, vol. 44(2), pages 251-271, August.
- BERGIN, James & LIPMAN, Bart, 1994.
"Evolution with State-Dependent Mutations,"
CORE Discussion Papers
1994055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Kandori, M. & Mailath, G.J., 1991.
"Learning, Mutation, And Long Run Equilibria In Games,"
71, Princeton, Woodrow Wilson School - John M. Olin Program.
- Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
- M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
- Maruta, Toshimasa, 2002. "Binary Games with State Dependent Stochastic Choice," Journal of Economic Theory, Elsevier, vol. 103(2), pages 351-376, April.
- Binmore, Ken & Samuelson, Larry, 1997. "Muddling Through: Noisy Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 74(2), pages 235-265, June.
- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, December.
- Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
- van Damme, Eric & Weibull, Jorgen W., 2002.
"Evolution in Games with Endogenous Mistake Probabilities,"
Journal of Economic Theory,
Elsevier, vol. 106(2), pages 296-315, October.
- Damme, E.E.C. van & Weibull, J., 2002. "Evolution in games with endogenous mistake probabilities," Open Access publications from Tilburg University urn:nbn:nl:ui:12-91438, Tilburg University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (In Choi).
If references are entirely missing, you can add them using this form.