Stochastic Stability of a Recency Weighted Sampling Dynamic

Alexander Aurell and Gustav Karreskog

Papers from arXiv.org

Abstract: We introduce and study a model of long-run convention formation for rare interactions. Players in this model form beliefs by observing a recency-weighted sample of past interactions, to which they noisily best respond. We propose a continuous state Markov model, well-suited for our setting, and develop a methodology that is relevant for a larger class of similar learning models. We show that the model admits a unique asymptotic distribution which concentrates its mass on some minimal CURB block configuration. In contrast to existing literature of long-run convention formation, we focus on behavior inside minimal CURB blocks and provide conditions for convergence to (approximate) mixed equilibria conventions inside minimal CURB blocks.

Date: 2020-09, Revised 2021-06
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2009.12910 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2009.12910

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().