Equilibrium selection in the two-population KMR model

Burkhard Hehenkamp

Discussion Papers in Economics from University of Dortmund, Department of Economics

Abstract: This paper shows that, contrary to common conception, robust equilibrium selection is possible in the two-population model of evolution by Kandori, Mailath and Rob (1993). Investigating the class of individualistic adjustment dynamics, we establish that, for generic 2x2 co-ordination games, the evolutionary process always selects the mutation-dominant equilibrium. The concepts of mutation dominance and risk dominance yield different equilibrium predictions, since the concept of mutation dominance additionally captures the systemic risk arising from random matching.

Pages: 19 pages
Date: 2001-01
New Economics Papers: this item is included in nep-evo and nep-gth
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Journal Article: Equilibrium Selection in the Two-Population KMR Model (2003)
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