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Migration and the evolution of conventions

Author

Listed:
  • Fernando Vega Redondo

    (Instituto Valenciano de Investigaciones Económicas)

  • Ventakamaran Bhaskar

    (Department of Economics)

Abstract

This paper analyzes an evolutionary model where agents are locally matched to playa coordination game and can adjust both their strategy and location. Their decisions are subject to friction, so that an agent who migrates to a different location may be unable to adjust her strategy optimally to the new environment. A condition on off-equilibrium payoffs introduced by Aumann (1993) plays a major role in our characterization (for general coordination games) of the long-run outcomes. For the particular 2 x 2 case, this condition (which is unrelated to risk dominance) implies that the possibility of medium term simultaneous co-existence of conventions at different locations depends on whether the game is of "pure" coordination (where co-existence is always possible) or of the stag'-hunt type (where it is not). When we introduce noise (Le. mutations) into the model, this distinction continuous to play a crucial role in the selection of the long'-run equilibria: for large friction, both equilibria are stochastically stable in the former case, whereas only the efficient one is so in the latter.

Suggested Citation

  • Fernando Vega Redondo & Ventakamaran Bhaskar, 1996. "Migration and the evolution of conventions," Working Papers. Serie AD 1996-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:1996-23
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    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-1996-23.pdf
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    References listed on IDEAS

    as
    1. Glenn Ellison, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(1), pages 17-45.
    2. Ellison, Glenn, 1993. "Learning, Local Interaction, and Coordination," Econometrica, Econometric Society, vol. 61(5), pages 1047-1071, September.
    3. Kandori Michihiro & Rob Rafael, 1995. "Evolution of Equilibria in the Long Run: A General Theory and Applications," Journal of Economic Theory, Elsevier, vol. 65(2), pages 383-414, April.
    4. Dieckmann, Tone, 1999. "The evolution of conventions with mobile players," Journal of Economic Behavior & Organization, Elsevier, vol. 38(1), pages 93-111, January.
    5. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    6. Farrell, Joseph, 1988. "Communication, coordination and Nash equilibrium," Economics Letters, Elsevier, vol. 27(3), pages 209-214.
    7. Binmore, Ken & Samuelson, Larry, 1997. "Muddling Through: Noisy Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 74(2), pages 235-265, June.
    8. Oechssler, Jorg, 1997. "Decentralization and the coordination problem," Journal of Economic Behavior & Organization, Elsevier, vol. 32(1), pages 119-135, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Migration; evolution; conventions;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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