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On the existence and stability of Pareto optimal endogenous matching with fairness

  • Dai, Darong
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    In the current paper, we study the asymmetric normal-form game between two heterogeneous groups of populations by employing the stochastic replicator dynamics driven by Lévy process. A new game equilibrium, i.e., the game equilibrium of a stochastic differential cooperative game on time, is derived by introducing optimal-stopping technique into evolutionary game theory, which combines with the Pareto optimal standard leads us to the existence of Pareto optimal endogenous matching. Moreover, stability of the Pareto optimal endogenous matching is confirmed by essentially using the well-known Girsanov Theorem.

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    File URL: http://mpra.ub.uni-muenchen.de/40457/1/MPRA_paper_40457.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 40457.

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    Date of creation: 15 Apr 2012
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    Handle: RePEc:pra:mprapa:40457
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    1. Darong Dai, 2012. "Stochastic Versions of Turnpike Theorems in the Sense of Uniform Topology," Annals of Economics and Finance, Society for AEF, vol. 13(2), pages 381-423, November.
    2. Luca Anderlini, 1995. "Communication, Computability and Common Interest Games," Game Theory and Information 9510003, EconWPA.
    3. Binmore, Ken & Samuelson, Larry, 1997. "Muddling Through: Noisy Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 74(2), pages 235-265, June.
    4. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
    5. Jordan J. S., 1993. "Three Problems in Learning Mixed-Strategy Nash Equilibria," Games and Economic Behavior, Elsevier, vol. 5(3), pages 368-386, July.
    6. Frank Riedel, 2009. "Optimal Stopping With Multiple Priors," Econometrica, Econometric Society, vol. 77(3), pages 857-908, 05.
    7. Fudenberg, D. & Harris, C., 1992. "Evolutionary dynamics with aggregate shocks," Journal of Economic Theory, Elsevier, vol. 57(2), pages 420-441, August.
    8. Canning, D., 1990. "Average Behaviour In Learning Models," Papers 156, Cambridge - Risk, Information & Quantity Signals.
    9. A. Cabrales, 2010. "Stochastic Replicator Dynamics," Levine's Working Paper Archive 489, David K. Levine.
    10. Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1995. "Social Norms and Random Matching Games," Games and Economic Behavior, Elsevier, vol. 9(1), pages 79-109, April.
    11. Kirchkamp, Oliver & Nagel, Rosemarie, 2007. "Naive learning and cooperation in network experiments," Games and Economic Behavior, Elsevier, vol. 58(2), pages 269-292, February.
    12. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 47-70, March.
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