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A classification of bargaining solutions by evolutionary origin

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  • Hwang, Sung-Ha
  • Newton, Jonathan

Abstract

For games of contracting under perturbed best response dynamics, varying the perturbations along two dimensions (uniform vs. logit, directed vs. undirected) gives four possibilities. Three of these select differing major bargaining solutions as stochastically stable. The fourth possibility yields a new bargaining solution which exhibits significant nonmonotonicities and demonstrates the interplay of two key drivers of evolutionary selection: (i) the ease of making errors; (ii) the ease of responding to errors.

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Bibliographic Info

Paper provided by University of Sydney, School of Economics in its series Working Papers with number 2014-02.

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Date of creation: Jan 2014
Date of revision: Apr 2014
Handle: RePEc:syd:wpaper:2123/9993

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Keywords: bargaining; adaptive learning; Evolution;

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References

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  1. Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, Elsevier, vol. 5(3), pages 387-424, July.
  2. Kalai, Ehud, 1977. "Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons," Econometrica, Econometric Society, Econometric Society, vol. 45(7), pages 1623-30, October.
  3. Agastya, Murali, 1999. "Perturbed Adaptive Dynamics in Coalition Form Games," Journal of Economic Theory, Elsevier, Elsevier, vol. 89(2), pages 207-233, December.
  4. Newton, Jonathan, 2012. "Recontracting and stochastic stability in cooperative games," Journal of Economic Theory, Elsevier, Elsevier, vol. 147(1), pages 364-381.
  5. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, Econometric Society, vol. 18(2), pages 155-162, April.
  6. Binmore, Ken & Samuelson, Larry & Young, Peyton, 2003. "Equilibrium selection in bargaining models," Games and Economic Behavior, Elsevier, Elsevier, vol. 45(2), pages 296-328, November.
  7. Marianna Belloc & Samuel Bowles, 2013. "The Persistence of Inferior Cultural-Institutional Conventions," American Economic Review, American Economic Association, American Economic Association, vol. 103(3), pages 93-98, May.
  8. van Damme, Eric & Weibull, Jorgen W., 2002. "Evolution in Games with Endogenous Mistake Probabilities," Journal of Economic Theory, Elsevier, Elsevier, vol. 106(2), pages 296-315, October.
  9. Ken Binmore & Larry Samuelson & Petyon Young, 2003. "Equilibrium Selection in Bargaining Models," Levine's Bibliography 506439000000000466, UCLA Department of Economics.
  10. Naidu, Suresh & Hwang, Sung-Ha & Bowles, Samuel, 2010. "Evolutionary bargaining with intentional idiosyncratic play," Economics Letters, Elsevier, Elsevier, vol. 109(1), pages 31-33, October.
  11. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
  12. Young, H Peyton, 1998. "Conventional Contracts," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 65(4), pages 773-92, October.
  13. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, Econometric Society, vol. 43(3), pages 513-18, May.
  14. Young H. P., 1993. "An Evolutionary Model of Bargaining," Journal of Economic Theory, Elsevier, Elsevier, vol. 59(1), pages 145-168, February.
  15. Newton, Jonathan, 2012. "Coalitional stochastic stability," Games and Economic Behavior, Elsevier, Elsevier, vol. 75(2), pages 842-854.
  16. BERGIN, James & LIPMAN, Bart, 1994. "Evolution with State-Dependent Mutations," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1994055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. Alan Beggs, 2003. "Waiting Times and Equilibrium Selection," Economics Series Working Papers 142, University of Oxford, Department of Economics.
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