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Positive feedback in coordination games: Stochastic evolutionary dynamics and the logit choice rule

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  • Hwang, Sung-Ha
  • Rey-Bellet, Luc

Abstract

We study the problem of stochastic stability for evolutionary dynamics under the logit choice rule. We consider general classes of coordination games, symmetric or asymmetric, with an arbitrary number of strategies, which satisfies the marginal bandwagon property (i.e., there is positive feedback to coordinate). Our main result is that the most likely evolutionary escape paths from a status quo convention consist of a series of identical mistakes. As an application of our result, we show that the Nash bargaining solution arises as the long run convention for the evolutionary Nash demand game under the usual logit choice rule. We also obtain a new bargaining solution if the logit choice rule is combined with intentional idiosyncratic plays. The new bargaining solution is more egalitarian than the Nash bargaining solution, demonstrating that intentionality implies equality under the logit choice model.

Suggested Citation

  • Hwang, Sung-Ha & Rey-Bellet, Luc, 2021. "Positive feedback in coordination games: Stochastic evolutionary dynamics and the logit choice rule," Games and Economic Behavior, Elsevier, vol. 126(C), pages 355-373.
  • Handle: RePEc:eee:gamebe:v:126:y:2021:i:c:p:355-373
    DOI: 10.1016/j.geb.2021.01.003
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    More about this item

    Keywords

    Evolutionary games; Logit choice rules; Positive feedback; Marginal bandwagon property; Exit problems; Stochastic stability; Nash demand games; Nash bargaining solution;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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