Evolution and Rationality: Some Recent Game-Theoretic Results

Abhijit Banerjee, Jörgen Weibull and Ken Binmore
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Ken Binmore: University College London

Chapter 4 in Economics in a Changing World, 1996, pp 90-117 from Palgrave Macmillan

Abstract: Abstract A large part of economics, and economic theory in particular, relies on such solution concepts as Nash equilibrium and its refinements. Unfortunately, it is difficult to provide a solid theoretical or empirical justification for Nash equilibrium behaviour. ‘Rationality’, or even ‘common knowledge of rationality’, is not enough to generate such behaviour. Among other things, one also needs to assume that the players coordinate their beliefs about each other’s actions (Armbruster and Boege, 1979; Johansen, 1982; Bernheim, 1984; Pearce, 1984; Bernheim, 1986; Binmore, 1987; Aumann, 1987; Tan and Werlang, 1988; Aumann and Brandenburger, 1991). Moreover, in games with a dynamic structure, the very notion of rationality becomes problematic, and common knowledge of rationality may even lead to logical contradictions (Rosenthal, 1981; Binmore, 1987; Bicchieri, 1989; Basu, 1988, 1990).

Keywords: Nash Equilibrium; Mixed Strategy; Pure Strategy; Good Reply; Evolutionary Stable Strategy (search for similar items in EconPapers)
Date: 1996
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Working Paper: Evolution and Rationality: Some Recent Game-Theoretic Results (1992)
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DOI: 10.1007/978-1-349-25168-1_4

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