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Sampling dynamics applied to the traveler's dilemma reveals non-Nash behavior

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  • Berkemer, Rainer
  • Starke, Jens
  • Kawamoto, Atsushi

Abstract

The traveler's dilemma is characterized by a strict Nash equilibrium that is Pareto-inefficient. Even though a coordinated choice of more efficient options would be preferred by both players, any individual deviation from Nash behavior will induce a lower payoff. Yet experimental behavior reported in the literature demonstrates that deviations from Nash behavior toward Pareto-better outcomes are typical. An application of the sampling dynamics to this dilemma further justifies the non-Nash behavior. Due to the fact, that the sampling dynamics is not payoff-monotonic, even dominated strategies can survive the selection process. It is shown that for a generalized traveler's dilemma an interior equilibrium attracts almost all trajectories, given that there are sufficiently many options. The limit for infinitely many options is derived.

Suggested Citation

  • Berkemer, Rainer & Starke, Jens & Kawamoto, Atsushi, 2023. "Sampling dynamics applied to the traveler's dilemma reveals non-Nash behavior," Games and Economic Behavior, Elsevier, vol. 142(C), pages 339-356.
    • Handle: RePEc:eee:gamebe:v:142:y:2023:i:c:p:339-356
    DOI: 10.1016/j.geb.2023.08.008
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