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Competition among Conventions

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  • Joerg Oechssler

    (Columbia University)

Abstract

A convention can be seen as the standard way of playing a game. If different conventions exist in various geographical, social or other entities (called "towns") and if there is some mobility between these towns, which conventions, if any, will emerge as the successful ones? A simple evolutionary process is suggested and it is shown that the process converges to a Nash equilibrium for all games satisfying weak acyclity or a condition called evolutionary stable with respect to pure strategies (ESPS). Further, if the process converges, it converges to an efficient convention for all games in which the Pareto optimal symmetric equilibria are strict. Hence, the paper presents an explanation for the endogenous evolution of efficiency. In contrast to most recent studies in evolutionary game theory, the conclusions do not rely on random "mutations". Instead, the driving force is the tendency of players to have increased interaction with member of their own group (viscosity).

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Bibliographic Info

Paper provided by EconWPA in its series Game Theory and Information with number 9312001.

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Length: 21 pages
Date of creation: 02 Dec 1993
Date of revision: 04 Dec 1993
Handle: RePEc:wpa:wuwpga:9312001

Note: Word for Windows 2.0 file, 21 pages, uuencoded after 'get'-ing it by email, 'uudecode' it. A Post Script file is available from the author.
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References

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  1. 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.
  2. G. Noldeke & L. Samuelson, 2010. "An Evolutionary Analysis of Backward and Forward Induction," Levine's Working Paper Archive 538, David K. Levine.
  3. M. Kandori & R. Rob, 2010. "Evolution of Equilibria in the Long Run: A General Theory and Applications," Levine's Working Paper Archive 502, David K. Levine.
  4. Myerson, Roger B. & Pollock, Gregory B. & Swinkels, Jeroen M., 1991. "Viscous population equilibria," Games and Economic Behavior, Elsevier, vol. 3(1), pages 101-109, February.
  5. Robson, A.J., 1989. "Efficiency In Evolutionary Games: Darwin, Nash And Secret Handshake," Papers 89-22, Michigan - Center for Research on Economic & Social Theory.
  6. Aumann, Robert J. & Sorin, Sylvain, 1989. "Cooperation and bounded recall," Games and Economic Behavior, Elsevier, vol. 1(1), pages 5-39, March.
  7. Sobel, Joel, 1993. "Evolutionary stability and efficiency," Economics Letters, Elsevier, vol. 42(2-3), pages 301-312.
  8. repec:fth:coluec:621 is not listed on IDEAS
  9. Matsui, Akihiko, 1991. "Cheap-talk and cooperation in a society," Journal of Economic Theory, Elsevier, vol. 54(2), pages 245-258, August.
  10. Glen Ellison, 2010. "Learning, Local Interaction, and Coordination," Levine's Working Paper Archive 391, David K. Levine.
  11. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  12. Van Huyck, John B. & Gillette, Ann B. & Battalio, Raymond C., 1992. "Credible assignments in coordination games," Games and Economic Behavior, Elsevier, vol. 4(4), pages 606-626, October.
  13. repec:fth:coluec:607 is not listed on IDEAS
  14. 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.
  15. Akihiko Matsui, 1989. "Cheap Talk and Cooperation in the Society," Discussion Papers 848, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  16. Samuelson, Larry, 1991. "Limit evolutionarily stable strategies in two-player, normal form games," Games and Economic Behavior, Elsevier, vol. 3(1), pages 110-128, February.
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Cited by:
  1. Joerg Oechssler, 1994. "Decentralization and the Coordination Problem," Game Theory and Information 9403004, EconWPA.
  2. Joerg Oechssler, 1994. "An Evolutionary Interpretation Of Mixed-Strategy Equilibria," Game Theory and Information 9404001, EconWPA.
  3. Simon Weidenholzer, 2010. "Coordination Games and Local Interactions: A Survey of the Game Theoretic Literature," Games, MDPI, Open Access Journal, vol. 1(4), pages 551-585, November.

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