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Contagion and State Dependent Mutations

Author

Listed:
  • Lee In Ho

    (Seoul National University and University of Southampton)

  • Szeidl Adam

    (Harvard University)

  • Valentinyi Akos

    (University of Southampton, Institute of Economics, Hungarian Academy of Sciences & CEPR)

Abstract

Early results of evolutionary game theory showed that the risk dominant equilibrium is uniquely selected in the long run under the best-response dynamics with mutation. Bergin and Lipman (1996) qualified this result by showing that for a given population size, the evolutionary process can select any strict Nash equilibrium if the probability of choosing a nonbest response is state-dependent. This paper shows that the unique selection of the risk dominant equilibrium is robust with respect to state dependent mutation in local interaction games. More precisely, for any given mutation structure there exists a minimum population size beyond which the risk dominant equilibrium is uniquely selected. Our result is driven by contagion and cohesion among players, which exist only in local interaction settings and favor the risk dominant strategy. Our result strengthens the equilibrium selection result of evolutionary game theory.

Suggested Citation

  • Lee In Ho & Szeidl Adam & Valentinyi Akos, 2003. "Contagion and State Dependent Mutations," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-29, February.
    • Handle: RePEc:bpj:bejtec:v:advances.3:y:2003:i:1:n:2
    DOI: 10.2202/1534-5963.1063
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Jiang, Ge & Weidenholzer, Simon, 2014. "Local Interactions and Switching Costs," Economics Discussion Papers 9015, University of Essex, Department of Economics.
    2. Ge Jiang & Simon Weidenholzer, 2017. "Local interactions under switching costs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(3), pages 571-588, October.
    3. repec:esx:essedp:746 is not listed on IDEAS
    4. Ennio Bilancini & Leonardo Boncinelli, 2020. "The evolution of conventions under condition-dependent mistakes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(2), pages 497-521, March.
    5. repec:unm:unumer:2014036 is not listed on IDEAS
    6. Weidenholzer, Simon, 2012. "Long-run equilibria, dominated strategies, and local interactions," Games and Economic Behavior, Elsevier, vol. 75(2), pages 1014-1024.
    7. Thomas Norman, "undated". "Step-by-Step Evolution with State-Dependent Mutations," Economics Papers 2003-W08, Economics Group, Nuffield College, University of Oxford.
    8. Peski, Marcin, 2010. "Generalized risk-dominance and asymmetric dynamics," Journal of Economic Theory, Elsevier, vol. 145(1), pages 216-248, January.
    9. Azomahou, T. & Opolot, D., 2014. "Stability and strategic diffusion in networks," MERIT Working Papers 2014-035, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Jiang, Ge & Weidenholzer, Simon, 2016. "Local Interactions under Switching Costs," Economics Discussion Papers 17770, University of Essex, Department of Economics.
    11. Weidenholzer, Simon, 2012. "Long-run equilibria, dominated strategies, and local interactions," Games and Economic Behavior, Elsevier, vol. 75(2), pages 1014-1024.
    12. Simon Weidenholzer, 2010. "Coordination Games and Local Interactions: A Survey of the Game Theoretic Literature," Games, MDPI, vol. 1(4), pages 1-35, November.
    13. Daniel C. Opolot & Théophile T. Azomahou, 2021. "Strategic diffusion in networks through contagion," Journal of Evolutionary Economics, Springer, vol. 31(3), pages 995-1027, July.

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    More about this item

    Keywords

    Contagion; state dependent mutations; risk dominance; local interaction games;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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