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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)

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

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Samuelson, L. & Zhang, J., 1991. "Evolutionary Stability in Asymmetric Games," Papers 9132, Tilburg - Center for Economic Research.
    Other versions:
  2. 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.
  3. Joerg Oechssler, 1994. "An Evolutionary Interpretation Of Mixed-Strategy Equilibria," Game Theory and Information 9404001, EconWPA. [Downloadable!]
    Other versions:
  4. repec:att:wimass:199325 is not listed on IDEAS
  5. Kyle Bagwell, 1992. "Commitment and Observability in Games," Discussion Papers 1014, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  6. van Damme, Eric & Hurkens, Sjaak, 1997. "Games with Imperfectly Observable Commitment," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 282-308, October. [Downloadable!] (restricted)
  7. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, vol. 57(2), pages 363-391, August. [Downloadable!] (restricted)
  8. Werner GÜTH & Georg KIRCHSTEIGER & Klaus RITZBERGER, 1995. "Imperfectly Observable Commitments in n-Player Games," Vienna Economics Papers vie9507, University of Vienna, Department of Economics.
    Other versions:
  9. Karl H. Schlag, . "Why Imitate, and if so, How? A Bounded Rational Approach to Multi- Armed Bandits," ELSE working papers 028, ESRC Centre on Economics Learning and Social Evolution. [Downloadable!]
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  10. Friedman, Daniel, 1991. "Evolutionary Games in Economics," Econometrica, Econometric Society, vol. 59(3), pages 637-66, May. [Downloadable!] (restricted)
  11. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, December.
  12. Noeldecke,Georg & Samuelson,Larry, . "An evolutionary analysis of backward and forward induction," Discussion Paper Serie B 228, University of Bonn, Germany.
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  13. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January. [Downloadable!] (restricted)
  14. Matsui, Akihiko, 1992. "Best response dynamics and socially stable strategies," Journal of Economic Theory, Elsevier, vol. 57(2), pages 343-362, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. V. Bhaskar, 2005. "Commitment and Observability in an Economic Environment," Economics Discussion Papers 596, University of Essex, Department of Economics. [Downloadable!]
  2. 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). [Downloadable!]
    Other versions:
  3. 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). [Downloadable!]
    Other versions:
  4. 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. [Downloadable!]
    Other versions:
  5. Anders Poulsen & Odile Poulsen, 2008. "A note on commitment when there are errors in communication," Economics Bulletin, Economics Bulletin, vol. 3(74), pages 1-8. [Downloadable!]
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