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Muddling Through:Noisy Equilibrium Selection

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Author Info

  • Ken Binmore

    (University College, London)

  • Larry Samuelson

    (University of Wisconsin)

Abstract

We 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 Info

Paper provided by EconWPA in its series Game Theory and Information with number 9403005.

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Length: 39 pages
Date of creation: 24 Mar 1994
Date of revision: 29 Mar 1994
Handle: RePEc:wpa:wuwpga:9403005

Note: 39 pages, 6 figures,LaTeX file
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Web page: http://128.118.178.162

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  1. Carlsson, H. & Van Damme, E., 1990. "Global Games And Equilibrium Selection," Papers 9052, Tilburg - Center for Economic Research.
  2. Noldeke Georg & Samuelson Larry, 1993. "An Evolutionary Analysis of Backward and Forward Induction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 425-454, July.
  3. Mark Bagnoli & Ted Bergstrom, 2005. "Log-concave probability and its applications," Economic Theory, Springer, vol. 26(2), pages 445-469, 08.
  4. G. Ellison & D. Fudenberg, 2010. "Rules of Thumb for Social Learning," Levine's Working Paper Archive 435, David K. Levine.
  5. Gilboa, Itzhak & Schmeidler, David, 1996. "Case-Based Optimization," Games and Economic Behavior, Elsevier, vol. 15(1), pages 1-26, July.
  6. Glen Ellison, 2010. "Learning, Local Interaction, and Coordination," Levine's Working Paper Archive 391, David K. Levine.
  7. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  8. repec:att:wimass:9324 is not listed on IDEAS
  9. repec:att:wimass:9323 is not listed on IDEAS
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