NEWTONIAN MECHANICS AND NASH PLAY

S. D. Flåm () and Jacqueline Morgan
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S. D. Flåm: University of Bergen, Norway

International Game Theory Review (IGTR), 2004, vol. 06, issue 02, 181-194

Abstract: Nash equilibrium leaves the impression that each player foresees perfectly and responds optimally. Must human-like, rational agents really acquire both these faculties? This paper argues that in some instances neither is ever needed. For the argument repeated play is modelled here as a constrained, decentralized, second-order process driven by noncoordinated pursuit of better payoffs. Some friction feeds into — and stabilizes — a fairly myopic mode of behavior. Convergence to equilibrium therefore obtains under weak and natural conditions. An important condition is that accumulation of marginal payoffs, along the path of play, yields a sum which is bounded above.

Keywords: Noncooperative games; Nash equilibrium; repeated play; differential equations; Newtonian mechanics; energy dissipation; stochastic approximation; JEL classification C72 (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (4)

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DOI: 10.1142/S0219198904000149

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