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An Approach to Equilibrium Selection

  • Matsui Akihiko
  • Matsuyama Kiminori

We consider equilibrium selection in 2x2 bimatrix games with two strict Nash equilibria in a random matching framework. The players seek to maximize the discounted payoffs, but are restricted to make a short run commitment. Modeling the friction this way yields equilibrium dynamics of the behavior patters in the society. We define and characterize an absorbing and globally attractive state in this dynamics. It is shown that, as friction becomes arbitrarily small, a strict Nash equilibrium outcome becomes unique absorbing and globally attractive if and only if it satisfies the Harsanyi/Selton notion of risk-dominance criterion.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 65 (1995)
Issue (Month): 2 (April)
Pages: 415-434

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Handle: RePEc:eee:jetheo:v:65:y:1995:i:2:p:415-434
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  20. Matsuyama, Kiminori, 1992. "A Simple Model of Sectoral Adjustment," Review of Economic Studies, Wiley Blackwell, vol. 59(2), pages 375-88, April.
  21. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
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