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Cooperation through Imitation

  • James Bergin

    (Queen's University)

  • Dan Bernhardt

    (University of Illinois)

This paper characterizes long-run outcomes for broad classes of symmetric games, when players select actions on the basis of average historical performance. Received wisdom is that when agent's interests are partially opposed, behavior is excessively competitive: ``keeping up with the Jones' '' lowers everyones' welfare. Here, we study the long-run consequences of imitative behavior when agents have sufficiently long memories --- and the outcome is dramatically different. Imitation robustly leads to cooperative outcomes (with highest symmetric payoffs) in the long run. This provides a rationale, for example, for collusive cartel-like behavior without collusive intent on the part of the agents.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1042.pdf
File Function: First version 2006
Download Restriction: no

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1042.

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Length: 19 pages
Date of creation: Jan 2006
Date of revision:
Handle: RePEc:qed:wpaper:1042
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Web page: http://qed.econ.queensu.ca/
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  1. Arthur J Robson & Fernando Vega-Redondo, 1999. "Efficient Equilibrium Selection in Evolutionary Games with Random Matching," Levine's Working Paper Archive 2112, David K. Levine.
  2. Sarin, Rajiv, 2000. "Decision Rules with Bounded Memory," Journal of Economic Theory, Elsevier, vol. 90(1), pages 151-160, January.
  3. Fernando Vega Redondo, 1996. "The evolution of walrasian behavior," Working Papers. Serie AD 1996-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  4. Josephson, Jens & Matros, Alexander, 2004. "Stochastic imitation in finite games," Games and Economic Behavior, Elsevier, vol. 49(2), pages 244-259, November.
  5. J. Bergin & B. Lipman, 2010. "Evolution with State-Dependent Mutations," Levine's Working Paper Archive 486, David K. Levine.
  6. Carlos Alós-Ferrer & Ana Ania, 2005. "The evolutionary stability of perfectly competitive behavior," Economic Theory, Springer, vol. 26(3), pages 497-516, October.
  7. Carlos Alós-Ferrer, 2001. "Cournot versus Walras in Dynamic Oligopolies with Memory," Vienna Economics Papers 0110, University of Vienna, Department of Economics.
  8. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  9. Ellison, Glenn, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," Review of Economic Studies, Wiley Blackwell, vol. 67(1), pages 17-45, January.
  10. Drew Fudenberg & David K. Levine, 1998. "Learning in Games," Levine's Working Paper Archive 2222, David K. Levine.
  11. James Bergin & Dan Bernhardt, 2004. "Comparative Learning Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 431-465, 05.
  12. Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 375-405, May.
  13. Eshel, Ilan & Samuelson, Larry & Shaked, Avner, 1998. "Altruists, Egoists, and Hooligans in a Local Interaction Model," American Economic Review, American Economic Association, vol. 88(1), pages 157-79, March.
  14. Steffen Huck & Hans-Theo Normann & Joerg Oechssler, 2004. "Through Trial and Error to Collusion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(1), pages 205-224, 02.
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