The evolution of mixed conjectures in the rent-extraction game
This paper adopts an evolutionary perspective on the rent-extraction model with conjectural variations (CV). We analyze the global dynamics of the model with three CVs under the replicator equation. We find that the end points of the evolutionary dynamics include the pure-strategy consistent CVs. However, there are also mixed-strategy equilibria that occur. These are on the boundaries between the basins of attraction of the pure-strategy sinks. We develop a more general notion of consistency which applies to mixed-strategy equilibria. In a three conjecture example, we find that in contrast to the pure-strategy equilibria, the mixed-strategy equilibria are not ESS: under the replicator dynamics, there are three or four mixed equilibria that may either be totally unstable, or saddle-stable. There also exist heteroclinic orbits that link equilibria together.
|Date of creation:||Apr 2011|
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- Jean-Marie, Alain & Tidball, Mabel, 2006. "Adapting behaviors through a learning process," Journal of Economic Behavior & Organization, Elsevier, vol. 60(3), pages 399-422, July.
- Nicolas Quérou & Mabel Tidball, 2009. "Consistent Conjectures in a Dynamic Model of Non-renewable Resource Management," Working Papers 09-28, LAMETA, Universtiy of Montpellier, revised Dec 2009.
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