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Long-run equilibria, dominated strategies, and local interactions

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  • Weidenholzer, Simon

Abstract

We revisit a result by Kim and Wong (2010) showing that under global interactions any strict Nash equilibrium of a coordination game can be supported as long run equilibrium by properly adding dominated strategies. We show that in the circular city model of local interactions and in the torus model of local interactions the selection of 12-dominant strategies remains when adding strictly dominated strategies if interaction is sufficiently local. Conversely, if the local interaction structure is “central” in the circular city model any equilibrium strategy of the original game can be supported as long run equilibrium by adding properly suited dominated strategies.

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  • Weidenholzer, Simon, 2012. "Long-run equilibria, dominated strategies, and local interactions," Games and Economic Behavior, Elsevier, vol. 75(2), pages 1014-1024.
    • Handle: RePEc:eee:gamebe:v:75:y:2012:i:2:p:1014-1024
    DOI: 10.1016/j.geb.2012.01.004
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    References listed on IDEAS

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    1. Alos-Ferrer, Carlos & Weidenholzer, Simon, 2007. "Partial bandwagon effects and local interactions," Games and Economic Behavior, Elsevier, vol. 61(2), pages 179-197, November.
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    Cited by:

    1. 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.
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    3. 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.
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    More about this item

    Keywords

    Dominated strategies; Local interactions; Learning;
    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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