Learning, Tracing, and Risk Dominance

Ebbe Hendon, Hans Jørgen Jacobsen, Michael Teit Nielsen and Birgitte Sloth ()
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Ebbe Hendon: Institute of Economics, University of Copenhagen
Hans Jørgen Jacobsen: Institute of Economics, University of Copenhagen
Michael Teit Nielsen: Institute of Economics, University of Copenhagen

No 92-10, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: This paper presents a learning process which is a generalization of the method of fictitious play of Brown. If the learning process converges, the convergence point is a Nash equilibrium. We study 2 × 2 games. Here the process always converges. The relation between the initial prior, the weight assigned to this prior, and the equilibrium selected is examined. As the weight increases, the relation between the prior and the equilibrium selected becomes almost identical to that of the tracing procedure of Harsanyi. In this way the learning process supports the concept of risk dominance of Harsanyi and Selten (1988).

JEL-codes: C72 (search for similar items in EconPapers)
Pages: 14 pages
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Published in: Games and Economic Behavior, 1994, 7(3) pp 332-45

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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:9210

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