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An Evolutionary Analysis of Bagwell's Example

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Author Info

  • Jorg Oechssler

    (Humboldt University, Berlin)

  • Karl Schlag

    (University of Bonn)

Abstract

In a recent paper Bagwell (1995) pointed out that only the Cournot outcome, but not the Stackelberg outcome, can be supported by a pure Nash equilibrium when actions of the Stackelberg leader are observed with the slightest error. The Stackelberg outcome, however, remains close to the outcome of a mixed equilibrium. We compare the predictions in various classes of evolutionary and learning processes in this game. Only the continuous best response dynamic uniquely selects the Stackelberg outcome under noise. All other dynamics analyzed allow for the Cournot equilibrium to be selected. In typical cases Cournot is the unique long run outcome even for vanishing noise in the signal.

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Bibliographic Info

Paper provided by EconWPA in its series Game Theory and Information with number 9704001.

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Date of creation: 05 Apr 1997
Date of revision: 11 Apr 1997
Handle: RePEc:wpa:wuwpga:9704001

Note: Pages: 19
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Web page: http://128.118.178.162

Related research

Keywords: imperfectly observable commitment; evolution; imitation; learning; equilibrium selection;

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References

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  1. Guth, Werner & Kirchsteiger, Georg & Ritzberger, Klaus, 1998. "Imperfectly Observable Commitments inn-Player Games," Games and Economic Behavior, Elsevier, vol. 23(1), pages 54-74, April.
  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. Friedman, Daniel, 1991. "Evolutionary Games in Economics," Econometrica, Econometric Society, vol. 59(3), pages 637-66, May.
  4. Samuelson, L. & Zhang, J., 1990. "Evolutionary Stability In Symmetric Games," Working papers 90-24, Wisconsin Madison - Social Systems.
  5. van Damme, Eric & Hurkens, Sjaak, 1997. "Games with Imperfectly Observable Commitment," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 282-308, October.
  6. Schlag, Karl H., 1998. "Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits," Journal of Economic Theory, Elsevier, vol. 78(1), pages 130-156, January.
  7. 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.
  8. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, vol. 57(2), pages 363-391, August.
  9. Joerg Oechssler, 1994. "An Evolutionary Interpretation Of Mixed-Strategy Equilibria," Game Theory and Information 9404001, EconWPA.
  10. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  11. Matsui, Akihiko, 1992. "Best response dynamics and socially stable strategies," Journal of Economic Theory, Elsevier, vol. 57(2), pages 343-362, August.
  12. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, December.
  13. Bagwell, Kyle, 1995. "Commitment and observability in games," Games and Economic Behavior, Elsevier, vol. 8(2), pages 271-280.
  14. Samuelson Larry, 1994. "Stochastic Stability in Games with Alternative Best Replies," Journal of Economic Theory, Elsevier, vol. 64(1), pages 35-65, October.
  15. Gale, John & Binmore, Kenneth G. & Samuelson, Larry, 1995. "Learning to be imperfect: The ultimatum game," Games and Economic Behavior, Elsevier, vol. 8(1), pages 56-90.
  16. repec:att:wimass:9325 is not listed on IDEAS
  17. Damme, E.E.C. van & Hurkens, J.P.M., 1994. "Games with imperfectly observable commitment," Discussion Paper 1994-64, Tilburg University, Center for Economic Research.
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Citations

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Cited by:
  1. Johan Lagerlöf, 2000. "Policy-Motivated Candidates, Noisy Platforms, and Non-Robustness," CIG Working Papers FS IV 00-17, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  2. repec:ebl:ecbull:v:3:y:2008:i:74:p:1-8 is not listed on IDEAS
  3. Wieland Müller & Yossi Spiegel & Werner Güth, . "Noisy leadership: An experimental approach," Papers on Strategic Interaction 2002-10, Max Planck Institute of Economics, Strategic Interaction Group.
  4. Giovanni Ponti, 2000. "Splitting The Baby In Two: How To Solve Solomon'S Dilemma When Agents Are Boundedly Rational," Working Papers. Serie AD 2000-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

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