Muddling Through:Noisy Equilibrium Selection
AbstractWe examine an evolutionary model in which the primary source of "noise" that moves the model between equilibria is not random, arbitrarily improbable mutations but mistakes in learning. We find conditions under which the payoff-dominant equilibrium in a 2 x 2 game is selected by the model as well as conditions under which the risk-dominant equilibrium is selected. The relevant risk-dominance considerations, however, arise not in the original game but in a "fitness game" derived from the process by which payoffs in the original game are translated into evolutionary fitnesses. We also find that waiting times until the limiting distribution is reached can be shorter than in a mutation-driven model. To explore the robustness of the results to the specification of the model, we present a number of comparative static results as well as a "two- tiered"evolutionary model in ehich the rules by which agents learn to play the game are themselves subject to evolutionary pressure. Journal of Economic Literature Classification Number C70.
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Bibliographic InfoPaper provided by EconWPA in its series Game Theory and Information with number 9403005.
Length: 39 pages
Date of creation: 24 Mar 1994
Date of revision: 29 Mar 1994
Note: 39 pages, 6 figures,LaTeX file
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Other versions of this item:
- Binmore, K. & samuelson, L., 1996. "Muddling Through : Noisy Equilibrium Section," Working papers 9410r, Wisconsin Madison - Social Systems.
- Ken Binmore & Larry Samuelson, 1994. "Muddling Through: Noisy Equilibrium Selection," Game Theory and Information 9410002, EconWPA.
- Binmore, Ken & Larry Samuelson, 1994. "Muddling Through: Noisy Equilibrium Selection," Discussion Paper Serie B 275, University of Bonn, Germany.
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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