Contagion and State Dependent Mutations

In Ho Lee, Adam Szeidl and Akos Valentinyi ()
Additional contact information
In Ho Lee: Seoul National University and University of Southampton
Adam Szeidl: Harvard University

The B.E. Journal of Theoretical Economics, 2003, vol. advances.3, issue 1

Abstract: Early results of evolutionary game theory showed that the risk dominant equilibrium is uniquely selected in the long run under the best-response dynamics with mutation. Bergin and Lipman (1996) qualified this result by showing that for a given population size, the evolutionary process can select any strict Nash equilibrium if the probability of choosing a nonbest response is state-dependent. This paper shows that the unique selection of the risk dominant equilibrium is robust with respect to state dependent mutation in local interaction games. More precisely, for any given mutation structure there exists a minimum population size beyond which the risk dominant equilibrium is uniquely selected. Our result is driven by contagion and cohesion among players, which exist only in local interaction settings and favor the risk dominant strategy. Our result strengthens the equilibrium selection result of evolutionary game theory.

Keywords: Contagion; state dependent mutations; risk dominance; local interaction games (search for similar items in EconPapers)
JEL-codes: C72 D83 (search for similar items in EconPapers)
Date: 2003

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Working Paper: Contagion and State Dependent Mutations (2001)
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Persistent link: http://EconPapers.repec.org/RePEc:bpj:bejtec:v:advances.3:y:2003:i:1:n:2

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