Expectations, drift and volatility in evolutionary games

Fernando Vega Redondo
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Fernando Vega Redondo: Instituto Valenciano de Investigaciones Económicas
Authors registered in the RePEc Author Service: Fernando Vega-Redondo

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: This paper introduces expectations into the framework of evolutionary games. On the one hand, (myopic) players are assumed to behave optimally according to the expectations they hold at each point of the process. On the other hand, expectations themselves are continuously updated according to the players' latest experience. The possibility of random drift on expectations (i.e., arbitrary variation on them not opposed by selection forces) produces sharp volatility across equilibria. Specifically, all Nash equilibria (but only these) have positive weight in the limit stationary distribution, independently of risk -or payoff-dominance considerations.

Keywords: Drift; volatility; evolution (search for similar items in EconPapers)
Pages: 27 pages
Date: 1994-03
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http://www.ivie.es/downloads/docs/wpasad/wpasad-1994-02.pdf Fisrt version / Primera version, 1994 (application/pdf)

Related works:
Journal Article: Expectations, Drift, and Volatility in Evolutionary Games (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:1994-02

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