Muddling Through:Noisy Equilibrium Selection

Ken Binmore and Larry Samuelson
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Ken Binmore: University College, London

Game Theory and Information from University Library of Munich, Germany

Abstract: We examine an evolutionary model in which the primary source of "noise" that moves the model between equilibria is not random, arbitrarily improbable mutations but mistakes in learning. We find conditions under which the payoff-dominant equilibrium in a 2 x 2 game is selected by the model as well as conditions under which the risk-dominant equilibrium is selected. The relevant risk-dominance considerations, however, arise not in the original game but in a "fitness game" derived from the process by which payoffs in the original game are translated into evolutionary fitnesses. We also find that waiting times until the limiting distribution is reached can be shorter than in a mutation-driven model. To explore the robustness of the results to the specification of the model, we present a number of comparative static results as well as a "two- tiered"evolutionary model in ehich the rules by which agents learn to play the game are themselves subject to evolutionary pressure. Journal of Economic Literature Classification Number C70.

JEL-codes: C7 D8 (search for similar items in EconPapers)
Pages: 39 pages
Date: 1994-03-24, Revised 1994-03-29
Note: 39 pages, 6 figures,LaTeX file
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Muddling Through: Noisy Equilibrium Section (1996)
Working Paper: Muddling Through: Noisy Equilibrium selection (1994)
Working Paper: Muddling Through: Noisy Equilibrium Selection (1994)
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