Economics at your fingertips  

Evolutionarily Stable (Mis)specifications:Theory and Applications

Kevin He and Jonathan Libgober ()
Additional contact information
Jonathan Libgober: University of Southern California

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: We introduce an evolutionary framework to evaluate competing (mis)specifications in strategic situations, focusing on which misspecifications can persist over correct specifications. Agents with heterogeneous specifications coexist in a society and repeatedly play a stage game against random opponents, drawing Bayesian inferences about the environment based on personal experience. One specification is evolutionarily stable against another if, when-ever sufficiently prevalent, its adherents obtain higher average payoffs than their counterparts. Agents’ equilibrium beliefs are constrained but not wholly determined by specifications. En-dogenous belief formation through the learning channel generates novel stability phenomena compared to frameworks where single beliefs are the heritable units of cultural transmission. In linear-quadratic-normal games where players receive correlated signals but possibly misperceive the information structure, the correct specification is evolutionarily unstable against a correlational error whose direction depends on social interaction structure. We also endogenize coarse thinking in games and show how its prevalence varies with game parameters.

Keywords: misspecified Bayesian learning; endogenous misspecifications; evolutionary stability; higher-order beliefs; analogy classes (search for similar items in EconPapers)
Pages: 68 pages
Date: 2021-08-12
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Working Paper: Evolutionarily Stable (Mis)specifications: Theory and Applications (2022) Downloads
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:

Access Statistics for this paper

More papers in PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 133 South 36th Street, Philadelphia, PA 19104. Contact information at EDIRC.
Bibliographic data for series maintained by Administrator ().

Page updated 2023-01-29
Handle: RePEc:pen:papers:21-020