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Learning and equilibrium selection in a coordination game with heterogeneous agents

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  • Fogale, Alberto
  • Pellizzari, Paolo
  • Warglien, Massimo

Abstract

We study a modified version of the coordination game presented in [J. van Huyck, J. Cook, R. Battalio, Selection dynamics, asymptotic stability, and adaptive behavior, J. Polit. Econ. 102 (1994) 975–1005], where a representative selection dynamics was proposed to explain experimental data. Assuming that the agents adjust their moves in the direction of the best response, we derive a formal analysis of the stability of the equilibria. We show by simulation that the interior equilibrium is robustly reached even when considerable heterogeneity is allowed among the agents. Our truly multi-agent game is capable of approximating quite well both the “median” game convergence and the experimental data.

Suggested Citation

  • Fogale, Alberto & Pellizzari, Paolo & Warglien, Massimo, 2007. "Learning and equilibrium selection in a coordination game with heterogeneous agents," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 380(C), pages 519-527.
    • Handle: RePEc:eee:phsmap:v:380:y:2007:i:c:p:519-527
    DOI: 10.1016/j.physa.2007.02.073
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    References listed on IDEAS

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    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, April.
    2. Fudenberg, Drew & Levine, David, 1998. "Learning in games," European Economic Review, Elsevier, vol. 42(3-5), pages 631-639, May.
    3. Kreps,David M. & Wallis,Kenneth F. (ed.), 1997. "Advances in Economics and Econometrics: Theory and Applications," Cambridge Books, Cambridge University Press, number 9780521589833, October.
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    7. Kreps,David M. & Wallis,Kenneth F. (ed.), 1997. "Advances in Economics and Econometrics: Theory and Applications," Cambridge Books, Cambridge University Press, number 9780521589819, October.
    8. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 47-70, March.
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    More about this item

    Keywords

    Coordination games; Selection dynamics; Equilibrium selection; Heterogeneous agents;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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