Rule Evolution and Equilibrium Selection

Abstract This paper studies rule evolution and its effect on selection between strict equilibria. Two rules are investigated; the myopic best response and naive imitation. If agents cannot change rules, equilibrium selection is determined by the relative frequency of agents using the two rules. When agents can only change rules through mutation, the efficient equilibrium weakly dominates the risk-dominant one. If agents can change rules by updating, then the efficient equilibrium strictly dominates the risk-dominant one. Journal of Economic Literature Classification Numbers: C72, C73, D81.

[1]  Michihiro Kandori,et al.  Evolution of Equilibria in the Long Run: A General Theory and Applications , 1995 .

[2]  M. Freidlin,et al.  Random Perturbations of Dynamical Systems , 1984 .

[3]  F. Vega-Redondo,et al.  Efficient Equilibrium Selection in Evolutionary Games with Random Matching , 1996 .

[4]  Stephen Morris,et al.  P-dominance and belief potential , 2010 .

[5]  Burkhard C. Schipper.  Imitators and Optimizers in Cournot Oligopoly , 2007 .

[6]  H. Young,et al.  The Evolution of Conventions , 1993 .

[7]  D. Fudenberg,et al.  Evolutionary Dynamics with Aggregate Shocks , 1992 .

[8]  J. M. Smith,et al.  The Logic of Animal Conflict , 1973, Nature.

[9]  John C. Harsanyi,et al.  Общая теория выбора равновесия в играх / A General Theory of Equilibrium Selection in Games , 1989 .

[10]  H. Peyton Young,et al.  Stochastic Evolutionary Game Dynamics , 1990 .

[11]  Barton L. Lipman,et al.  Evolution with State-Dependent Mutations , 1996 .

[12]  H. Peyton Young,et al.  Adaptive Dynamics in Games Played by Heterogeneous Populations , 2000, Games Econ. Behav..

[13]  G. Grimmett,et al.  Probability and random processes , 2002 .

[14]  Glenn Ellison.  Learning, Local Interaction, and Coordination , 1993 .

[15]  Drew Fudenberg,et al.  Learning in extensive-form games I. Self-confirming equilibria , 1995 .

[16]  J M Smith,et al.  Evolution and the theory of games , 1976 .

[17]  R. Rob,et al.  Learning, Mutation, and Long Run Equilibria in Games , 1993 .

[18]  Ken Binmore,et al.  An Economist's Perspective on the Evolution of Norms , 1993 .