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Stochastically Stable Equilibria in Coordination Games with Multiple Populations

Toshimasa Maruta and Akira Okada

No 2009-01, Discussion Papers from Graduate School of Economics, Hitotsubashi University

Abstract: We investigate the equilibrium selection problem in n-person binary coordination games by means of adaptive play with mistakes (Young 1993). The size and the depth of a particular type of basins of attraction are found to be the main factors in determining the selection outcome. The main result shows that if a strategy has the larger basin of attraction, and if it is deep enough, then the strategy constitutes a stochastically stable equilibrium. The existence of games with multiple stochastically stable equilibria is an immediate consequence of the result. We explicitly address the qualitative difference between selection results in multi-dimensional stochastic evolution models and those in single dimensional models, and shed some light on the source of the difference.

Keywords: Equilibrium selection; stochastic stability; unanimity game; coordination game (search for similar items in EconPapers)
JEL-codes: C70 C72 D70 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo and nep-gth
Date: 2009-01
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Handle: RePEc:hit:econdp:2009-01