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Evolutionary Drift and Equilibrium Selection

  • Ken Binmore
  • Larry Samuelson
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    This paper develops an approach to equilibrium selection in game theory based on studying the equilibriating process through which equilibrium is achieved. The differential equations derived from models of interactive learning typically have stationary states that are not isolated. Instead, Nash equilibria that specify the same behavior on the equilibrium path, but different out-of-equilibrium behavior, appear in connected components of stationary states. The stability properties of these components often depend critically on the perturbations to which the system is subjected. We argue that it is then important to incorporate such drift into the model. A suffcient condition is provided for drift to create stationary states with strong stability properties near a component of equilibria. This result is used to derive comparative static predictions concerning common questions raised in the literature on refinements of Nash equilibrium

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    Paper provided by ESRC Centre on Economics Learning and Social Evolution in its series ELSE working papers with number 011.

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    Handle: RePEc:els:esrcls:011
    Contact details of provider: Web page: http://else.econ.ucl.ac.uk/
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