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Muddling Through: Noisy Equilibrium Selection

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  • Binmore, Ken
  • Samuelson, Larry

Abstract

We examine an evolutionary model in which the primary source of "noise" that moves the model between equilibria is not random, arbitrarily improbable mutations but mistakes in learning. We find conditions under which the risk-dominant equilibrium in a 2 x 2 game is selected by the model as well as conditions under which the payoff-dominant equilibrium is selected. We also find that waiting times until the limiting distribution is reached can be shorter than in a mutation-driven model. We present comparative static results as well as a "two-tiered" evolutionary model in which the rules by which agents learn to play the game are themselves subject to evolutionary pressure.

Suggested Citation

  • Binmore, Ken & Samuelson, Larry, 1995. "Muddling Through: Noisy Equilibrium Selection," SSRI Workshop Series 292703, University of Wisconsin-Madison, Social Systems Research Institute.
    • Handle: RePEc:ags:uwssri:292703
    DOI: 10.22004/ag.econ.292703
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    Cited by:

    1. Juang, Wei-Torng, 2002. "Rule Evolution and Equilibrium Selection," Games and Economic Behavior, Elsevier, vol. 39(1), pages 71-90, April.

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    Research Methods/ Statistical Methods;

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