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Coordination and Equilibrium selection in mean defined supermodular games under payoff monotonic selection dynamics

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Huw Dixon
Ernesto Somma

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Abstract

This paper introduces the class of mean defined supermodular games. The characteristic feature of these games is that, given an order on the strategy sets of the players, the payoff to each player depends on his own strategy and the average of the population play. We characterise the set of the Nash equilibria and analyse their dynamic properties under payoff monotonic selection dynamics. Weak Nash equilibria, both in pure and mixed strategies, are unstable. The only asymptotically stable equilibria of the game are symmetric strict equilibria where each player uses the same strategy. We show that the strategies that do not survive the process of iterated deletion of strictly dominated strategies vanish in the long run. As a corollary to this latter result, we show that if the game is dominance solvable then the dynamics converges from any initial interior state.

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Paper provided by Department of Economics, University of York in its series Discussion Papers with number 99/37.

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Handle: RePEc:yor:yorken:99/37

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Keywords: Strategic complementarities; supermodular games; bounded rationality; replicator dynamics; coordination failures.;

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  2. Binmore, Ken & Samuelson, Larry, 1997. "Muddling Through: Noisy Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 74(2), pages 235-265, June. [Downloadable!] (restricted)
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  7. Binmore, Ken & Larry Samuelson, 1994. "Muddling Through: Noisy Equilibrium Selection," Discussion Paper Serie B 275, University of Bonn, Germany.
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  8. Joseph Farrell & Garth Saloner, 1985. "Installed Base and Compatibility With Implications for Product Preannouncements," Working papers 385, Massachusetts Institute of Technology (MIT), Department of Economics.
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  9. 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. [Downloadable!] (restricted)
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  10. Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August. [Downloadable!] (restricted)
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  14. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, vol. 57(2), pages 363-391, August. [Downloadable!] (restricted)
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  17. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215.
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  20. Vives, Xavier, 1990. "Nash equilibrium with strategic complementarities," Journal of Mathematical Economics, Elsevier, vol. 19(3), pages 305-321. [Downloadable!] (restricted)
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  21. repec:att:wimass:199324 is not listed on IDEAS
  22. Nachbar, J H, 1990. ""Evolutionary" Selection Dynamics in Games: Convergence and Limit Properties," International Journal of Game Theory, Springer, vol. 19(1), pages 59-89.
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  24. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January. [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. R Cornes & R Hartley, 2005. "The Geometry of Aggregative Games," The School of Economics Discussion Paper Series 0514, Economics, The University of Manchester. [Downloadable!]
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