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Adaptive dynamics with payoff heterogeneit

Author

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  • David P Myatt
  • Chris Wallace

Abstract

A finite population of agents playing a 2 x 2 symmetric game evolves by adaptive best response. The assumption that players make mistakes is dropped in favor of one where players differ, via payoff heterogeneity. Arbitrary mutations are thus replaced with an economically justified specification. The depth as well as the width of basins of attraction is important when determining long-run behaviour. With vanishing noise and balanced payoff variances, the risk dominant equilibrium is selected. Unbalanced variances may result in the selection of other equilibra, including the payoff dominant. The ergodic extremer correspond exactly to the Bayesian Nash equilibria of the underlying trembled stage game. This enables an analysis of the ergodic distribution for non-vanishing nise and larger populations.
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Suggested Citation

  • David P Myatt & Chris Wallace, "undated". "Adaptive dynamics with payoff heterogeneit," Economics Papers W31., Economics Group, Nuffield College, University of Oxford.
  • Handle: RePEc:nuf:econwp:9631
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    File URL: http://www.nuff.ox.ac.uk/economics/papers/1996/w31/adaptv4.ps
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    References listed on IDEAS

    as
    1. Ole E. Barndorff-Nielsen & Neil Shephard, 2001. "Econometric Analysis of Realised Covariation: High Frequency Covariance, Regression and Correlation in Financial Economics," Economics Papers 2002-W13, Economics Group, Nuffield College, University of Oxford, revised 18 Mar 2002.
    2. Neil Shephard, 2005. "Stochastic Volatility," Economics Papers 2005-W17, Economics Group, Nuffield College, University of Oxford.
    3. Ole Barndorff-Nielsen & Elisa Nicolato & Neil Shephard, 2002. "Some recent developments in stochastic volatility modelling," Quantitative Finance, Taylor & Francis Journals, vol. 2(1), pages 11-23.
    4. Ole E. Barndorff-Nielsen & Neil Shephard, 2001. "Realised power variation and stochastic volatility models," Economics Papers 2001-W18, Economics Group, Nuffield College, University of Oxford.
    5. Ole E. Barndorff-Nielsen & Shephard, 2002. "Econometric analysis of realized volatility and its use in estimating stochastic volatility models," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 64(2), pages 253-280.
    6. Ole E. Barndorff-Nielsen & Neil Shephard, 2001. "Non-Gaussian Ornstein-Uhlenbeck-based models and some of their uses in financial economics," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 63(2), pages 167-241.
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    Cited by:

    1. Stephen Morris & Hyun Song Shin, 2003. "Heterogeneity and Uniqueness in Interaction Games," Cowles Foundation Discussion Papers 1402, Cowles Foundation for Research in Economics, Yale University.

    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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