IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/vadvances.2y2002i1n1.html
   My bibliography  Save this article

Local Conventions

Author

Listed:
  • Ely Jeffrey C

    (Economics Department, Northwestern University, junk@wilamette.econ.northwestern.edu)

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.

Suggested Citation

  • Ely Jeffrey C, 2002. "Local Conventions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 2(1), pages 1-32, May.
    • Handle: RePEc:bpj:bejtec:v:advances.2:y:2002:i:1:n:1
    DOI: 10.2202/1534-5963.1044
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1534-5963.1044
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1534-5963.1044?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maarten C.W. Janssen, 1997. "Focal Points," Tinbergen Institute Discussion Papers 97-091/1, Tinbergen Institute.
    2. Michael Kosfeld, 2002. "Stochastic strategy adjustment in coordination games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(2), pages 321-339.
    3. Burkhard C. Schipper, 2004. "Submodularity and the evolution of Walrasian behavior," International Journal of Game Theory, Springer;Game Theory Society, vol. 32(4), pages 471-477, August.
    4. Siegfried Berninghaus & Hans Haller & Alexander Outkin, 2006. "Neural networks and contagion," Revue d'économie industrielle, De Boeck Université, vol. 0(2), pages 11-11.
    5. Anthonisen, Niels, 1997. "On the Convergence of Beliefs within Populations in Games with Learning," Journal of Economic Theory, Elsevier, vol. 76(1), pages 169-184, September.
    6. Ianni, A., 2002. "Reinforcement learning and the power law of practice: some analytical results," Discussion Paper Series In Economics And Econometrics 203, Economics Division, School of Social Sciences, University of Southampton.
    7. Takuya Sekiguchi, 2023. "Fixation Probabilities of Strategies for Trimatrix Games and Their Applications to Triadic Conflict," Dynamic Games and Applications, Springer, vol. 13(3), pages 1005-1033, September.
    8. Jun Honda, 2015. "Games with the Total Bandwagon Property," Department of Economics Working Papers wuwp197, Vienna University of Economics and Business, Department of Economics.
    9. Bergstrom, Theodore C & Stark, Oded, 1993. "How Altruism Can Prevail in an Evolutionary Environment," American Economic Review, American Economic Association, vol. 83(2), pages 149-155, May.
    10. , & , & ,, 2008. "Monotone methods for equilibrium selection under perfect foresight dynamics," Theoretical Economics, Econometric Society, vol. 3(2), June.
    11. Basov, S., 2001. "An Evolutionary Model of Reciprocity," Department of Economics - Working Papers Series 812, The University of Melbourne.
    12. Ball, Richard, 2017. "Violations of monotonicity in evolutionary models with sample-based beliefs," Economics Letters, Elsevier, vol. 152(C), pages 100-104.
    13. Alos-Ferrer, Carlos & Ania, Ana B., 2001. "Local equilibria in economic games," Economics Letters, Elsevier, vol. 70(2), pages 165-173, February.
    14. Olivier Compte & Andrew Postlewaite, 2007. "Effecting Cooperation," PIER Working Paper Archive 09-019, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 29 May 2009.
    15. van Damme, E.E.C., 1995. "Game theory : The next stage," Other publications TiSEM 7779b0f9-bef5-45c7-ae6b-7, Tilburg University, School of Economics and Management.
    16. Norman, Thomas W.L., 2009. "Rapid evolution under inertia," Games and Economic Behavior, Elsevier, vol. 66(2), pages 865-879, July.
    17. Enrico Zaninotto & Alessandro Rossi & Loris Gaio, 1999. "Stochastic learning in coordination games: a simulation approach," Quaderni DISA 015, Department of Computer and Management Sciences, University of Trento, Italy, revised 29 Jun 2003.
    18. Roland Pongou & Roberto Serrano, 2009. "A dynamic theory of fidelity networks with an application to the spread of HIV/AIDS," Working Papers 2009-03, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    19. John T. Scholz & Cheng‐Lung Wang, 2009. "Learning to Cooperate: Learning Networks and the Problem of Altruism," American Journal of Political Science, John Wiley & Sons, vol. 53(3), pages 572-587, July.
    20. Jean-Michel Grandmont, 1998. "Expectations Formation and Stability of Large Socioeconomic Systems," Econometrica, Econometric Society, vol. 66(4), pages 741-782, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:advances.2:y:2002:i:1:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.