Evolutionary stability of first price auctions

Fernando Louge and Frank Riedel
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Fernando Louge: Center for Mathematical Economics, Bielefeld University

No 435, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: This paper studies the evolutionary stability of the unique Nash equilibrium of a first price sealed bid auction. It is shown that the Nash equilibrium is not asymptotically stable under payoff monotonic dynamics for arbitrary initial populations. In contrast, when the initial population includes a continuum of strategies around the equilibrium, the replicator dynamic does converge to the Nash equilibrium. Simulations are presented for the replicator and Brown-von Neumann-Nash dynamics. They suggest that the convergence for the replicator dynamic is slow compared to the Brown-von Neumann-Nash dynamics.

Keywords: Auction theory; Evolutionary stability (search for similar items in EconPapers)
Date: 2011-08-16
New Economics Papers: this item is included in nep-cmp, nep-evo and nep-gth
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Citations: View citations in EconPapers (3)

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https://pub.uni-bielefeld.de/download/2316471/2319877 First Version, 2010 (application/pdf)

Related works:
Journal Article: Evolutionary Stability in First Price Auctions (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:bie:wpaper:435

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