# Monotone methods for equilibrium selection under perfect foresight dynamics

## Author

Listed:
• ,

(Graduate School of Economics, Hitotsubashi University)

• ,

(Department of Economics, Princeton University)

• ,

(Department of Mathematics, University of Vienna)

## Abstract

This paper studies a dynamic adjustment process in a large society of forward-looking agents where payoffs are given by a normal form supermodular game. The stationary states of the dynamics correspond to the Nash equilibria of the stage game. It is shown that if the stage game has a monotone potential maximizer, then the corresponding stationary state is uniquely linearly absorbing and globally accessible for any small degree of friction. A simple example of a unanimity game with three players is provided where there are multiple globally accessible states for a small friction.

## Suggested Citation

• , & , & ,, 2008. "Monotone methods for equilibrium selection under perfect foresight dynamics," Theoretical Economics, Econometric Society, vol. 3(2), June.
• Handle: RePEc:the:publsh:194
as

File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20080155/1817/83
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## References listed on IDEAS

as
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### Keywords

Equilibrium selection; perfect foresight dynamics; supermodular game; strategic complementarity; stochastic dominance; potential; monotone potential;
All these keywords.

### JEL classification:

• C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
• C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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