On the Relationship between Risk-Dominance and Stochastic Stability
In a 2 x2 symmetric game with two symmetric equilibria in pure strategies, one risk-dominates another if and only if the equilibrium strategy is a unique best response to any mixture that gives it at least a probability of one half. In a n x n symmetric game, we call a strategy globally risk-dominant if it is a unique best response to any mixture that gives it at least a probability of one half. We show that if a finite coordination game has a globally risk-dominant equilibrium then this is the one that is selected by the stochastic equilibrium selection processes proposed by Young and by Kandori, Mailath, and Rob.
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- Kandori, M. & Mailath, G.J., 1991.
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Discussion Paper Serie B
275, University of Bonn, Germany.
- Ken Binmore & Larry Samuelson, 1994. "Muddling Through:Noisy Equilibrium Selection," Game Theory and Information 9403005, EconWPA, revised 29 Mar 1994.
- Ken Binmore & Larry Samuelson, 1994. "Muddling Through: Noisy Equilibrium Selection," Game Theory and Information 9410002, EconWPA.
- Binmore, K. & samuelson, L., 1996. "Muddling Through : Noisy Equilibrium Section," Working papers 9410r, Wisconsin Madison - Social Systems.
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- M. Kandori & R. Rob, 2010. "Evolution of Equilibria in the Long Run: A General Theory and Applications," Levine's Working Paper Archive 502, David K. Levine.
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Econometric Society, vol. 61(5), pages 1047-71, September.
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