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Steady State Learning and Nash Equilibrium

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  • Drew Fudenberg
  • David K. Levine

Abstract

The authors study the steady states of a system in which players learn about the strategies their opponents are playing by updating their Bayesian priors in light of their observations. Players are matched.at random to play a fixed extensive-form game and each player observes the realized actions in his own matches but not the intended off-path play of his opponents or the realized actions in other matches. Because players are assumed to live finite lives, there are steady states in which learning continually takes place. If lifetimes are long and players are very patient, the steady state distribution of actions approximates those of a Nash equilibrium. Copyright 1993 by The Econometric Society.
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Suggested Citation

  • Drew Fudenberg & David K. Levine, 1993. "Steady State Learning and Nash Equilibrium," Levine's Working Paper Archive 373, David K. Levine.
  • Handle: RePEc:cla:levarc:373
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    References listed on IDEAS

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    1. Rubinstein Ariel & Wolinsky Asher, 1994. "Rationalizable Conjectural Equilibrium: Between Nash and Rationalizability," Games and Economic Behavior, Elsevier, vol. 6(2), pages 299-311, March.
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    8. David Canning, 1989. "Convergence to Equilibrium in a Sequence for Games with Learning," STICERD - Theoretical Economics Paper Series 190, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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