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Monotone Methods for Equilibrium Selection under Perfect Foresight Dynamics

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Listed:
  • Oyama, Daisuke
  • Takahashi, Satoru
  • Hofbauer, Josef

Abstract

This paper studies a dynamic adjustment process in a large society of forward-looking agents where payoffs are given by a normal form supermodular game. The stationary states of the dynamics correspond to the Nash equilibria of the stage game. It is shown that if the stage game has a monotone potential maximizer, then the corresponding stationary state is uniquely linearly absorbing and globally accessible for any small degree of friction. Among binary supermodular games, a simple example of a unanimity game with three players is provided where there are multiple globally accessible states for a small friction.

Suggested Citation

  • Oyama, Daisuke & Takahashi, Satoru & Hofbauer, Josef, 2003. "Monotone Methods for Equilibrium Selection under Perfect Foresight Dynamics," MPRA Paper 6721, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:6721
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    References listed on IDEAS

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    More about this item

    Keywords

    equilibrium selection; perfect foresight dynamics; supermodular game; strategic complementarity; stochastic dominance; potential; monotone potential;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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