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Rapid evolution under inertia

  • Norman, Thomas W.L.

This paper demonstrates that inertia driven by switching costs leads to more rapid evolution in a class of games that includes mxm pure coordination games. Under the best-response dynamic and a fixed rate of mutation, the expected waiting time to reach long-run equilibrium is of lower order in the presence of switching costs, due to the creation of new absorbing states that allow Ellison's [Ellison, G., 2000. Basins of attraction, long-run stochastic stability, and the speed of step-by-step evolution. Rev. Econ. Stud. 67, 17-45] "step-by-step" evolution to occur.

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File URL: http://www.sciencedirect.com/science/article/B6WFW-4TRCYG7-1/2/8faa9a90fe9904f377480bde13e6c252
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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 66 (2009)
Issue (Month): 2 (July)
Pages: 865-879

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Handle: RePEc:eee:gamebe:v:66:y:2009:i:2:p:865-879
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  1. Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
  2. Myatt, David P. & Wallace, Chris C., 2004. "Adaptive play by idiosyncratic agents," Games and Economic Behavior, Elsevier, vol. 48(1), pages 124-138, July.
  3. Samuelson Larry, 1994. "Stochastic Stability in Games with Alternative Best Replies," Journal of Economic Theory, Elsevier, vol. 64(1), pages 35-65, October.
  4. van Damme, E.E.C. & Weibull, J., 2002. "Evolution in games with endogenous mistake probabilities," Other publications TiSEM 1c779ce9-9daa-4893-9ddb-e, Tilburg University, School of Economics and Management.
  5. Borgers, Tilman & Sarin, Rajiv, 1997. "Learning Through Reinforcement and Replicator Dynamics," Journal of Economic Theory, Elsevier, vol. 77(1), pages 1-14, November.
  6. Ellison, Glenn, 1993. "Learning, Local Interaction, and Coordination," Econometrica, Econometric Society, vol. 61(5), pages 1047-71, September.
  7. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  8. Lipman, Barton L. & Wang, Ruqu, 2000. "Switching Costs in Frequently Repeated Games," Journal of Economic Theory, Elsevier, vol. 93(2), pages 149-190, August.
  9. Binmore, K. & samuelson, L., 1996. "Muddling Through : Noisy Equilibrium Section," Working papers 9410r, Wisconsin Madison - Social Systems.
  10. Arthur J Robson & Fernando Vega-Redondo, 1999. "Efficient Equilibrium Selection in Evolutionary Games with Random Matching," Levine's Working Paper Archive 2112, David K. Levine.
  11. Ellison, Glenn, 1997. "Learning from Personal Experience: One Rational Guy and the Justification of Myopia," Games and Economic Behavior, Elsevier, vol. 19(2), pages 180-210, May.
  12. repec:ner:tilbur:urn:nbn:nl:ui:12-91438 is not listed on IDEAS
  13. Brock,W.A. & Durlauf,S.N., 2000. "Discrete choice with social interactions," Working papers 7, Wisconsin Madison - Social Systems.
  14. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, June.
  15. Klemperer, Paul, 1995. "Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 515-39, October.
  16. J. Bergin & B. Lipman, 2010. "Evolution with State-Dependent Mutations," Levine's Working Paper Archive 486, David K. Levine.
  17. Binmore, Ken & Samuelson, Larry, 1997. "Muddling Through: Noisy Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 74(2), pages 235-265, June.
  18. Lawrence E. Blume, 1994. "How Noise Matters," Game Theory and Information 9407002, EconWPA, revised 27 Jul 1994.
  19. Sethi, Rajiv, 1998. "Strategy-Specific Barriers to Learning and Nonmonotonic Selection Dynamics," Games and Economic Behavior, Elsevier, vol. 23(2), pages 284-304, May.
  20. Ellison, Glenn, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," Review of Economic Studies, Wiley Blackwell, vol. 67(1), pages 17-45, January.
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