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Equilibrium Selection in the Two-Population KMR Model

Author

Listed:
  • Burkhard Hehenkamp

    (Lehrstuhl VWL (Mikroökonomie), Fakultät WiSo, Universität Dortmund, D - 44221 Dortmund, Germany)

Abstract

This paper shows that, for the class ofindividualistic adjustment dynamics, unique equilibrium selection is possible in the two-population model of evolution by Kandori, Mailath and Rob (1993). We establish that, for generic2×2co-ordination games, the evolutionary process always selects themutation-dominantequilibrium. Though the concepts of mutation dominance and risk dominance yield different equilibrium predictions, we show that mutation dominance represents a natural extension of risk dominance that additionally captures the risk arising from the evolutionary environment.

Suggested Citation

  • Burkhard Hehenkamp, 2003. "Equilibrium Selection in the Two-Population KMR Model," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 249-262.
    • Handle: RePEc:wsi:igtrxx:v:05:y:2003:i:03:n:s0219198903001045
    DOI: 10.1142/S0219198903001045
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    References listed on IDEAS

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    1. Hans Jorgen Jacobsen & Mogens Jensen & Brigitte Sloth, 1999. "On the structural difference between the evolutionary approach of Young and that of Kandori, Mailath and Rob," Economics Working Papers 477, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 1999.
    2. 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.
    3. Carlos Alós-Ferrer, 2003. "Finite Population Dynamics and Mixed Equilibria," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 263-290.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Evolution; co-ordination games; equilibrium selection; risk dominance; mutation dominance; stochastic stability;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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