Evolutionary Drift and Equilibrium Selection

Ken Binmore and Larry Samuelson
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Ken Binmore: Department of Economics, University College London
Larry Samuelson: Department of Economics, University of Wisconsin

No 26, Economics Series from Institute for Advanced Studies

Abstract: This paper develops an approach to equilibrium selection in game theory based on studying the equilibriating process through which equilibrium is achieved. The differential equations derived from models of interactive learning typically have stationary states that are not isolated. Instead, Nash equilibria that specify the same behavior on the equilibrium path, but different out-of-equilibrium behavior, appear in connected components of stationary states. The stability properties of these components often depend critically on the perturbations to which the system is subjected. We argue that it is then important to incorporate such drift into the model. A sufficient condition is provided for drift to create stationary states with strong stability properties near a component of equilibria. This result is used to derive comparative static predictions concerning common questions raised in the literature on refinements of Nash equlibrium.

Keywords: Evolutionary Games; Cheap Talk; Stability Drift (search for similar items in EconPapers)
JEL-codes: C70 C72 (search for similar items in EconPapers)
Pages: 42 pages
Date: 1996-02
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Citations: View citations in EconPapers (7)

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https://irihs.ihs.ac.at/id/eprint/888 First version, 1996 (application/pdf)

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