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A Behavioral Foundation for Models of Evolutionary Drift

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  • Uriarte Ayo, José Ramón

Abstract

Binmore and Samuelson (1999) have shown that perturbations (drift) are crucial to study the stability properties of Nash equilibria. We contribute to this literature by providing a behavioural foundation for models of evolutionary drift. In particular, this article introduces a microeconomic model of drift based on the similarity theory developed by Tversky (1977), Kahneman and Tversky (1979) and Rubinstein (1988),(1998). An innovation with respect to those works is that we deal with similarity relations that are derived from the perception that each agent has about how well he is playing the game. In addition, the similarity relations are adapted to a dynamic setting. We obtain different models of drift depending on how we model the agent´s assessment of his behaviour in the game. The examples of the ultimatum game and the chain-store game are used to show the conditions for each model to stabilize elements in the component of Nash equilibria that are not subgame- perfect. It is also shown how some models approximate the laboratory data about those games while others match the data.

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  • Uriarte Ayo, José Ramón, 2005. "A Behavioral Foundation for Models of Evolutionary Drift," IKERLANAK 6488, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    • Handle: RePEc:ehu:ikerla:6488
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    Cited by:

    1. Uriarte Ayo, José Ramón & Iriberri Etxebeste, Nagore, 2006. "The Language Game: A Game-Theoretic Approach to Language Contact," IKERLANAK 2006-24, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    2. Iriberri Etxebeste, Nagore & Uriarte Ayo, José Ramón, 2006. "The Language Game: A Game-Theoretic Approach to Language Contact," IKERLANAK 6232, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.

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