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Heterogeneity, Local Information, and Global Interaction

  • Aleksander Berentsen
  • Esther Bruegger
  • Simon Loertscher

Consider a society where all agents initially play "fair" and one agent invents a "cheating" strategy such as doping in sports. Which factors determine the success of the new cheating strategy? In order to study this question we consider an evolutionary game with heterogenous agents who can either play fair or cheat. We model heterogeneity by assuming that the players are either high or low types. Three factors determine the imitation dynamics of the model: the location and the type of the innovator, the distribution of types, and the information available to the agents. In particular we find that the economy is more likely to end up in a state where all agents cheat if the innovator is of low type or when the agents are maximally segregated.

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Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 182.

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Handle: RePEc:zur:iewwpx:182
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  1. Aleksander Berentsen & Yvan Lengwiler, 2004. "Fraudulent Accounting and Other Doping Games," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(3), pages 402-, September.
  2. A. Banerjee & Drew Fudenberg, 2010. "Word-of-Mouth Communication and Social Learning," Levine's Working Paper Archive 425, David K. Levine.
  3. 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.
  4. Glen Ellison, 2010. "Learning, Local Interaction, and Coordination," Levine's Working Paper Archive 391, David K. Levine.
  5. Fernando Vega-Redondo, 1997. "The Evolution of Walrasian Behavior," Econometrica, Econometric Society, vol. 65(2), pages 375-384, March.
  6. 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.
  7. Alos-Ferrer, Carlos & Ania, Ana B. & Schenk-Hoppe, Klaus Reiner, 2000. "An Evolutionary Model of Bertrand Oligopoly," Games and Economic Behavior, Elsevier, vol. 33(1), pages 1-19, October.
  8. Siegfried Berninghaus & Werner Güth & Hartmut Kliemt, 2003. "From teleology to evolution," Journal of Evolutionary Economics, Springer, vol. 13(4), pages 385-410, October.
  9. Glenn Ellison & Drew Fudenberg, 1995. "Word-of-Mouth Communication and Social Learning," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 93-125.
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