IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpga/9811003.html
   My bibliography  Save this paper

Stability of Equilibria in Games with Procedurally Rational Players

Author

Listed:
  • Rajiv Sethi

    (Barnard College, Columbia University)

Abstract

One approach to the modeling of bounded rationality in strategic environments is based on the dynamics of evolution and learning in games. An entirely different approach has been developed recently by Osborne and Rubinstein (1998). This latter approach is static and equilibrium based, but relies on less stringent assumptions regarding the knowledge and understanding of players than does the standard theory of Nash equilibrium. This paper formalizes Osborne and Rubinstein's dynamic interpretation of their equilibrium concept and thereby facilitates a comparison of this approach with the explicitly dynamic approach of evolutionary game theory. It turns out that the two approaches give rise to radically different static and dynamic predictions. For instance, dynamically stable equilibria can involve the playing of strictly dominated actions, and equilibria in which strictly actions are played with probability 1 can be unstable. Sufficient conditions for the instability of equilibria are provided for symmetric and asymmetric games.

Suggested Citation

  • Rajiv Sethi, 1998. "Stability of Equilibria in Games with Procedurally Rational Players," Game Theory and Information 9811003, EconWPA, revised 04 Mar 1999.
  • Handle: RePEc:wpa:wuwpga:9811003
    Note: Type of Document - Tex; prepared on IBM PC; to print on HP/PostScript; pages: 23; figures: included
    as

    Download full text from publisher

    File URL: http://econwpa.repec.org/eps/game/papers/9811/9811003.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ellison, Glenn, 1993. "Learning, Local Interaction, and Coordination," Econometrica, Econometric Society, vol. 61(5), pages 1047-1071, September.
    2. Osborne, Martin J & Rubinstein, Ariel, 1998. "Games with Procedurally Rational Players," American Economic Review, American Economic Association, vol. 88(4), pages 834-847, September.
    3. Simon, Herbert A, 1978. "Rationality as Process and as Product of Thought," American Economic Review, American Economic Association, vol. 68(2), pages 1-16, May.
    4. Sethi, Rajiv, 1998. "Strategy-Specific Barriers to Learning and Nonmonotonic Selection Dynamics," Games and Economic Behavior, Elsevier, vol. 23(2), pages 284-304, May.
    5. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    6. Dekel, Eddie & Scotchmer, Suzanne, 1992. "On the evolution of optimizing behavior," Journal of Economic Theory, Elsevier, vol. 57(2), pages 392-406, August.
    7. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, vol. 57(2), pages 363-391, August.
    8. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Huck Steffen & Sarin Rajiv, 2004. "Players With Limited Memory," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 4(1), pages 1-27, September.
    2. Juan Camilo Cárdenas & César Mantilla & Rajiv Sethi, 2015. "Stable Sampling Equilibrium in Common Pool Resource Games," Games, MDPI, Open Access Journal, vol. 6(3), pages 1-19, August.
    3. Jacek Miękisz & Michał Ramsza, 2013. "Sampling Dynamics of a Symmetric Ultimatum Game," Dynamic Games and Applications, Springer, vol. 3(3), pages 374-386, September.
    4. Shahi, Chander & Kant, Shashi, 2007. "An evolutionary game-theoretic approach to the strategies of community members under Joint Forest Management regime," Forest Policy and Economics, Elsevier, vol. 9(7), pages 763-775, April.
    5. Thorsten Chmura & Werner Güth, 2011. "The Minority of Three-Game: An Experimental and Theoretical Analysis," Games, MDPI, Open Access Journal, vol. 2(3), pages 1-22, September.
    6. J. C. R. Alcantud & Carlos Alós-Ferrer, 2002. "Choice-Nash Equilibria," Vienna Economics Papers 0209, University of Vienna, Department of Economics.
    7. Oechssler, Jorg & Schipper, Burkhard, 2003. "Can you guess the game you are playing?," Games and Economic Behavior, Elsevier, vol. 43(1), pages 137-152, April.
    8. Sandholm, William H. & Tercieux, Olivier & Oyama, Daisuke, 2015. "Sampling best response dynamics and deterministic equilibrium selection," Theoretical Economics, Econometric Society, vol. 10(1), January.
    9. Juan Camilo Cárdenas & César Mantilla & Rajiv Sethi, 2013. "Commons without Tragedy: Sampling Dynamics and Cooperative Resource Extraction," DOCUMENTOS CEDE 011892, UNIVERSIDAD DE LOS ANDES-CEDE.

    More about this item

    Keywords

    Dynamic Stability; S(1) Equilibrium; Procedural Rationality; Evolutionary Games;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpga:9811003. 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: (EconWPA). General contact details of provider: http://econwpa.repec.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.