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Evolutionary dynamics and equitable core selection in assignment games

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  • Nax, Heinrich H.
  • Pradelski, Bary S. R.

Abstract

We study evolutionary dynamics in assignment games where many agents interact anonymously at virtually no cost. The process is decentralized, very little information is available and trade takes place at many different prices simultaneously. We propose a completely uncoupled learning process that selects a subset of the core of the game with a natural equity interpretation. This happens even though agents have no knowledge of other agents’ strategies, payoffs, or the structure of the game, and there is no central authority with such knowledge either. In our model, agents randomly encounter other agents, make bids and offers for potential partnerships and match if the partnerships are profitable. Equity is favored by our dynamics because it is more stable, not because of any ex ante fairness criterion.

Suggested Citation

  • Nax, Heinrich H. & Pradelski, Bary S. R., 2015. "Evolutionary dynamics and equitable core selection in assignment games," LSE Research Online Documents on Economics 65428, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:65428
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    File URL: http://eprints.lse.ac.uk/65428/
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    References listed on IDEAS

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    Cited by:

    1. Nax, Heinrich H., 2015. "Equity dynamics in bargaining without information exchange," LSE Research Online Documents on Economics 65426, London School of Economics and Political Science, LSE Library.
    2. repec:jmi:articl:jmi-v2i1a1 is not listed on IDEAS
    3. Alós-Ferrer, Carlos & Buckenmaier, Johannes, 2017. "Trader matching and the selection of market institutions," Journal of Mathematical Economics, Elsevier, vol. 69(C), pages 118-127.
    4. repec:gam:jgames:v:7:y:2016:i:2:p:10:d:66888 is not listed on IDEAS
    5. Bolle Friedel & Otto Philipp E., 2016. "Matching as a Stochastic Process," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(3), pages 323-348, May.
    6. Heinrich H. Nax & Bary S. R. Pradelski, 2016. "Core Stability and Core Selection in a Decentralized Labor Matching Market," Games, MDPI, Open Access Journal, vol. 7(2), pages 1-16, March.

    More about this item

    Keywords

    assignment games; cooperative games; core; equity; evolutionary game theory; learning; matching markets; stochastic stability;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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