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Selecting Equilibria using Best-Response Dynamics

Author

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  • Vincent Boucher

    (Universite Laval)

Abstract

I propose a simple simulation procedure for large games with multiple equilibria. The simulation procedure is based on a best-response dynamic. The implied equilibrium selection mechanism is intuitive: more stable equilibria are selected with higher probability.

Suggested Citation

  • Vincent Boucher, 2017. "Selecting Equilibria using Best-Response Dynamics," Economics Bulletin, AccessEcon, vol. 37(4), pages 2728-2734.
  • Handle: RePEc:ebl:ecbull:eb-17-00487
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    References listed on IDEAS

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    1. Glenn Ellison, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," Review of Economic Studies, Oxford University Press, vol. 67(1), pages 17-45.
    2. , & , P., 2014. "Refinements of Nash equilibrium in potential games," Theoretical Economics, Econometric Society, vol. 9(3), September.
    3. Yann Bramoullé & Andrea Galeotti & Brian Rogers, 2016. "The Oxford Handbook of the Economics of Networks," Post-Print hal-01447842, HAL.
    4. Yann Bramoullé & Andrea Galeotti & Brian Rogers, 2016. "The Oxford Handbook of the Economics of Networks," Post-Print hal-03572533, HAL.
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    6. Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 147-165.
    7. Ui, Takashi, 2001. "Robust Equilibria of Potential Games," Econometrica, Econometric Society, vol. 69(5), pages 1373-1380, September.
    8. Jovanovic, Boyan, 1989. "Observable Implications of Models with Multiple Equilibria," Econometrica, Econometric Society, vol. 57(6), pages 1431-1437, November.
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    10. Kim, Youngse, 1996. "Equilibrium Selection inn-Person Coordination Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 203-227, August.
    11. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
    12. repec:spo:wpmain:info:hdl:2441/5rkqqmvrn4tl22s9mc4ao8ocg is not listed on IDEAS
    13. Alfred Galichon & Marc Henry, 2011. "Set Identification in Models with Multiple Equilibria," Review of Economic Studies, Oxford University Press, vol. 78(4), pages 1264-1298.
    14. Govindan, Srihari & Wilson, Robert B., 2005. "Refinements of Nash Equilibrium," Research Papers 1897, Stanford University, Graduate School of Business.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Vincent Boucher, 2017. "The Estimation of Network Formation Games with Positive Spillovers," Cahiers de recherche 1710, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
    2. Torsten Heinrich & Yoojin Jang & Luca Mungo & Marco Pangallo & Alex Scott & Bassel Tarbush & Samuel Wiese, 2021. "Best-response dynamics, playing sequences, and convergence to equilibrium in random games," Papers 2101.04222, arXiv.org, revised Nov 2021.
    3. Pangallo, Marco & Heinrich, Torsten & Jang, Yoojin & Scott, Alex & Tarbush, Bassel & Wiese, Samuel & Mungo, Luca, 2021. "Best-Response Dynamics, Playing Sequences, And Convergence To Equilibrium In Random Games," INET Oxford Working Papers 2021-23, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    4. Boucher, Vincent, 2020. "Equilibrium homophily in networks," European Economic Review, Elsevier, vol. 123(C).

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    More about this item

    Keywords

    Potential Games; Equilibrium Selection Mechanism; Basin of Attraction;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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