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Evolution and Correlated Equilibrium

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  • Koch, Lars P.

Abstract

We show that a set of outcomes outside the convex hull of Nash equilibria can be asymptotically stable with respect to convex monotonic evolutionary dynamics. Boundedly rational agents receive signals and condition the choice of strategies on the signals. A set of conditional strategies is asymptotically stable only if it represents a strict (correlated-)equilibrium set. There are correlated equilibria that cannot be represented by an asymptotically stable signal contingent strategy. For generic games it is shown that if signals are endogenous but no player has an incentive to manipulate the signal generating process and if the signal contingent strategy is asymptotically stable, then and only then, the outcome must be a strict Nash equilibrium.

Suggested Citation

  • Koch, Lars P., 2008. "Evolution and Correlated Equilibrium," Bonn Econ Discussion Papers 14/2008, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:142008
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    References listed on IDEAS

    as
    1. Viossat, Yannick, 2007. "The replicator dynamics does not lead to correlated equilibria," Games and Economic Behavior, Elsevier, vol. 59(2), pages 397-407, May.
    2. Yannick Viossat, 2004. "Replicator Dynamics and Correlated Equilibrium," Working Papers hal-00242953, HAL.
    3. R. J. Aumann & J. H. Dreze, 2005. "When All is Said and Done, How Should You Play and What Should You Expect?," Discussion Paper Series dp387, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
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    5. repec:dau:papers:123456789/1061 is not listed on IDEAS
    6. Ross Cressman, 2003. "Evolutionary Dynamics and Extensive Form Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262033054, December.
    7. Balkenborg, Dieter & Schlag, Karl H., 2007. "On the evolutionary selection of sets of Nash equilibria," Journal of Economic Theory, Elsevier, vol. 133(1), pages 295-315, March.
    8. Swinkels, Jeroen M., 1992. "Evolution and strategic stability: From maynard smith to kohlberg and mertens," Journal of Economic Theory, Elsevier, vol. 57(2), pages 333-342, August.
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    Cited by:

    1. Müller, Stephan, 2014. "The evolution of inequality aversion in a simplified game of life," University of Göttingen Working Papers in Economics 219, University of Goettingen, Department of Economics.
    2. Lars P. Metzger, 2018. "Evolution and correlated equilibrium," Journal of Evolutionary Economics, Springer, vol. 28(2), pages 333-346, April.

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    More about this item

    Keywords

    Dynamic Stability; Noncooperative Games; Correlated Equilibrium; Evolution;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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