A Trade Network Game With Endogenous Partner Selection
This paper develops a Trade Network Game (TNG) that combines evolutionary game play with endogenous partner selection. Resource- constrained buyers and sellers choose and refuse trade partners on the basis of continually updated expected payoffs. Partner selection takes place in accordance with a "deferred choice and refusal" mechanism that is shown to have interesting stability, optimality, and uniqueness properties. The iterated prisoner's dilemma strategies used by buyers and sellers to conduct their trades are evolved over time via a genetic algorithm that biases reproduction in favor of strategies that have been successful in past trades. The TNG is shown to encompass a variety of economic applications, such as job search games, labor markets modelled as assignment games, labor markets with endogenously determined workers and employers, and double auction games. To illustrate the way in which preferential partner selection interacts with game play in the TNG, resulting in the endogenous formation of trade networks, a 5-trader TNG is analyzed in detail.
|Date of creation:||May 1995|
|Contact details of provider:|| Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070|
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- William A. Brock & Steven N. Durlauf, 2001.
"Discrete Choice with Social Interactions,"
Review of Economic Studies,
Oxford University Press, vol. 68(2), pages 235-260.
- Hirshlifer, David & Rassmusen, Eric, 1989. "Cooperation in a repeated prisoners' dilemma with ostracism," Journal of Economic Behavior & Organization, Elsevier, vol. 12(1), pages 87-106, August.
- Dan Ashlock & Mark D. Smucker & E. Ann Stanley & Leigh Tesfatsion, 1995.
"Preferential Partner Selection in an Evolutionary Study of Prisoner's Dilemma,"
Game Theory and Information
9501002, EconWPA, revised 20 Jan 1995.
- Ashlock, Daniel & Smucker, Mark D. & Stanley, E. Ann & Tesfatsion, Leigh S., 1996. "Preferential Partner Selection in an Evolutionary Study of Prisoner's Dilemma," Staff General Research Papers Archive 1687, Iowa State University, Department of Economics.
- Stanley, E.A. & Ashlock, Daniel & Tesfatsion, Leigh, 1994. "Iterated Prisoner's Dilemma with Choice and Refusal of Partners," Staff General Research Papers Archive 11180, Iowa State University, Department of Economics.
- Alan P. Kirman, 1994.
"Economies with Interacting Agents,"
94-05-030, Santa Fe Institute.
- Yannis M. Ioannides, 1996. "Evolution of Trading Structures," Working Papers 96-04-020, Santa Fe Institute.
- Roth,Alvin E. & Sotomayor,Marilda A. Oliveira, 1992.
Cambridge University Press, number 9780521437882, December.
- Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
- Mailath, G.J. & Samuelson, L. & Shaked, A., 1994.
"Evolution and Endogenous Interations,"
9426, Wisconsin Madison - Social Systems.
- McFadzean, David & Tesfatsion, Leigh, 1999.
"A C++ Platform for the Evolution of Trade Networks,"
Springer;Society for Computational Economics, vol. 14(1-2), pages 109-134, October.
- David MCFADZEAN & Leigh TESFATSION, 1996. "A C++ Platform For The Evolution Of Trade Networks," Economic Report 39, Iowa State University Department of Economics.
- McFadzean, David & Tesfatsion, Leigh S., 1999. "A C++ Platform for the Evolution of Trade Networks," Staff General Research Papers Archive 1639, Iowa State University, Department of Economics.
- Hauk, Esther, 1997.
"Leaving the prison: A discussion of the Iterated prisoner`s dilemma under preferential partner selection,"
UC3M Working papers. Economics
6056, Universidad Carlos III de Madrid. Departamento de Economía.
- Esther Hauk, "undated". "Leaving the Prison: A Discussion of the Iterated Prisoner's Dilemma under Preferential Partner Selection," Computing in Economics and Finance 1996 _067, Society for Computational Economics.
When requesting a correction, please mention this item's handle: RePEc:isu:iowaer:36. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Curtis Balmer)
If references are entirely missing, you can add them using this form.