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Equilibrium selection in generalized Polya-urn coordination games with partial information on population shares

Author

Listed:
  • Giorgio Fagiolo

    (Institute of Economics, Sant'Anna School for Advanced Studies, Pisa, Italy)

Abstract

I investigate deterministic best-reply dynamics in generalized Polya-urn coordination games, where a Pareto dominant equilibrium coexists with a risk-dominant one and players have partial information on current population shares. After analytically deriving estimates for the basin of attraction of either equilibrium, I study numerically (and via simulation) equilibrium selection in the long run. Results indicate that risk dominance robustly prevails over Pareto efficiency as a selection principle. Furthermore, I find that the probability of selecting a Pareto-efficient outcome decreases the smaller the sample size drawn by entrants and increases the larger the initial pool of incumbents.

Suggested Citation

  • Giorgio Fagiolo, 2025. "Equilibrium selection in generalized Polya-urn coordination games with partial information on population shares," Economics Bulletin, AccessEcon, vol. 45(4), pages 1658-1665.
    • Handle: RePEc:ebl:ecbull:eb-25-00585
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    References listed on IDEAS

    as
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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling

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