Stochastic adaptation in finite games played by heterogeneous populations

Jens Josephson

Journal of Economic Dynamics and Control, 2009, vol. 33, issue 8, pages 1543-1554

Abstract: We analyze stochastic adaptation in finite n-player games played by heterogeneous populations containing best repliers, better repliers, and imitators. Individuals select strategies by applying a personal learning rule to a sample from a finite history of past play. We give sufficient conditions for convergence to minimal closed sets under better replies and selection of a Pareto dominant such set. Finally, we demonstrate that the stochastically stable states are sensitive to the sample size by showing convergence to the risk-dominant equilibrium for sufficiently small sample size and to the Pareto-dominant equilibrium for sufficiently large sample size in 2x2 coordination games.

Keywords: Heterogeneous; agents; Markov; chain; Stochastic; stability; Pareto; dominance; Risk; dominance (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:dyncon:v:33:y:2009:i:8:p:1543-1554

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