The evolution of conventions under incomplete information
AbstractWe formulate an evolutionary learning process in the spirit of Young (1993a) for games of incomplete information. The process involves trembles. For many games, if the amount of trembling is small, play will be in accordance with the games' (semi- strict) Bayesian equilibria most of the time. This supports the notion of Bayesian equilibrium. Further, often play will most of the time be in accordance with exactly one Bayesian equilibrium. This gives a selection among the Bayesian equilibria. For two specific games of economic interest we characterize this selection. The first is an extension to incomplete information of the prototype strategic conflict known as Chicken. The second is an incomplete information bilateral monopoly, which is also an extension to incomplete information of Nash's demand game, or a simple version of the so-called sealed bid double auction. For both games selection by evolutionary learning is in favor of Bayesian equilibria where some types of players fail to coordinate, such that the outcome is inefficient.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 475.
Date of creation: Jun 1997
Date of revision: Feb 2000
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Games of incomplete information; Bayesian equilibrium; evolution; learning; conventions;
Other versions of this item:
- Mogens Jensen & Birgitte Sloth & Hans Whitta-Jacobsen, 2005. "The evolution of conventions under incomplete information," Economic Theory, Springer, vol. 25(1), pages 171-185, 01.
- Hans Jorgen Jacobsen & Mogens Jensen & Birgitte Sloth, 2000. "The Evolution of Conventions under Incomplete Information," Econometric Society World Congress 2000 Contributed Papers 1340, Econometric Society.
- Mogens Jensen & Birgitte Sloth & Hans Jørgen Whitta-Jacobsen, . "The Evolution of Conventions under Incomplete Information," Discussion Papers 03-12, University of Copenhagen. Department of Economics, revised Mar 2003.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-07-03 (All new papers)
- NEP-EVO-2000-07-03 (Evolutionary Economics)
- NEP-GTH-2000-07-03 (Game Theory)
- NEP-IND-2000-07-03 (Industrial Organization)
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- Rene Saran & Roberto Serrano, 2010.
"Ex-post regret learning in games with fixed and random matching: The case of private values,"
2010-11, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
- Rene Saran & Roberto Serrano, 2010. "Ex-Post Regret Learning in Games with Fixed and Random Matching: The Case of Private Values," Working Papers 2010-11, Brown University, Department of Economics.
- Rene Saran & Roberto Serrano, 2010. "Ex-Post Regret Learning in Games with Fixed and Random Matching: The Case of Private Values," Levine's Working Paper Archive 661465000000000083, David K. Levine.
- Roberto Serrano & Rene Saran, 2007.
"The Evolution Of Bidding Behavior In Private-Values Auctions And Double Auctions,"
- Rene Saran & Roberto Serrano, 2007. "The evolution of bidding behavior in private-values auctions and double auctions," Working Papers 2007-10, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
- Rene Saran & Roberto Serrano, 2007. "The Evolution of Bidding Behavior in Private-Values Auction and Double Auctions," Working Papers 2007-01, Brown University, Department of Economics.
- Saran Rene & Serrano Roberto, 2010. "Ex-Post Regret Learning in Games with Fixed and Random Matching: The Case of Private Values," Research Memorandum 032, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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