Evolutionary stability of first price auctions
This paper studies the evolutionary stability of the unique Nash equilibrium of a first price sealed bid auction. It is shown that the Nash equilibrium is not asymptotically stable under payoff monotonic dynamics for arbitrary initial populations. In contrast, when the initial population includes a continuum of strategies around the equilibrium, the replicator dynamic does converge to the Nash equilibrium. Simulations are presented for the replicator and Brown-von Neumann-Nash dynamics. They suggest that the convergence for the replicator dynamic is slow compared to the Brown-von Neumann-Nash dynamics.
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| Date of creation: | 16 Aug 2011 |
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| Handle: | RePEc:bie:wpaper:435 |
| Contact details of provider: | Postal: Postfach 10 01 31, 33501 Bielefeld Phone: +49(0)521-106-4907 Web page: http://www.imw.uni-bielefeld.de/ More information through EDIRC
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