The evolution of mixed conjectures in the rent-extraction game
AbstractThis paper adopts an evolutionary perspective on the rent-extraction model with conjectural variations (CV). We analyze the global dynamics of the model with three CVs under the replicator equation. We find that the end points of the evolutionary dynamics include the pure-strategy consistent CVs. However, there are also mixed-strategy equilibria that occur. These are on the boundaries between the basins of attraction of the pure-strategy sinks. We develop a more general notion of consistency which applies to mixed-strategy equilibria. In a three conjecture example, we find that in contrast to the pure-strategy equilibria, the mixed-strategy equilibria are not ESS: under the replicator dynamics, there are three or four mixed equilibria that may either be totally unstable, or saddle-stable. There also exist heteroclinic orbits that link equilibria together.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 11/06.
Date of creation: Apr 2011
Date of revision:
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Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
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More information through EDIRC
Rent-extraction; evolutionary dynamics; consistent conjectures; global dynamics; mixed-strategy.;
Other versions of this item:
- Brito, Paulo & Datta, Bipasa & Dixon, Huw, 2012. "The evolution of mixed conjectures in the rent-extraction game," Cardiff Economics Working Papers E2012/23, Cardiff University, Cardiff Business School, Economics Section.
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- H0 - Public Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-16 (All new papers)
- NEP-EVO-2011-04-16 (Evolutionary Economics)
- NEP-GTH-2011-04-16 (Game Theory)
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.:
- Nicolas Quérou & Mabel Tidball, 2009. "Consistent Conjectures in a Dynamic Model of Non-renewable Resource Management," Working Papers 09-28, LAMETA, Universtiy of Montpellier, revised Dec 2009.
- Jean-Marie, Alain & Tidball, Mabel, 2006. "Adapting behaviors through a learning process," Journal of Economic Behavior & Organization, Elsevier, vol. 60(3), pages 399-422, July.
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