Local Conventions
Jeffrey Ely
No 1349, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science
Abstract:
It is shown that player mobility has important consequences for the long-run equilibrium distribution in dynamic evolutionary models of strategy adjustment, when updating is prone to small probability perturbations, i.e. “mistakes” or “mutations.” Ellison (1993) concluded that the effect on the matching process of localized “neighborhoods” was to strengthen the stability of risk-dominant outcomes, originally demonstrated by Kandori, Mailath, and Rob (1993) (KMR) and Young (1993). I consider a model in which players can choose the neighborhoods to which they belong. When strategies and locations are updated simultaneously, only efficient strategies survive. The robustness of this conclusion is emphasized in a general locational model in which strategy revision opportunities are allowed to arrive at a faster rate than opportunities to change locations. The efficient strategy persists in all cases in which the locational structure is non-trivial. Moreover, even as the relative frequency of player mobility approaches zero, the efficient strategy occurs with boundedly positive relative frequency. This result is in stark contrast to the conclusions of the previous models.
Keywords: stochastic evolution; local interaction; mobility (search for similar items in EconPapers)
Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (28)
Downloads: (external link)
http://www.dklevine.com/archive/refs4492.pdf main text (application/pdf)
Related works:
Working Paper: Local Conventions (2010) 
Journal Article: Local Conventions (2002) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:nwu:cmsems:1349
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014. Contact information at EDIRC.
Bibliographic data for series maintained by Fran Walker ( this e-mail address is bad, please contact ).