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Comparative Dynamics

Author

Listed:
  • James Bergin

    (Queen's University)

  • Dan Bernhardt

    (University of Illinois)

Abstract

This paper develops a dynamic evolutionary model in which agents make choices on the basis of relative performance criteria. We distinguish two classes of learned behavior: imitative dynamics and a new class of dynamics, "introspective dynamics." Under imitative dynamics, agents compare payoffs of different agents in the population and tend to imitate more successful behavior in the population. Under introspective dynamics, agents compare their own current with past payoffs and tend to select actions that provide higher payoffs. With introspective dynamics, under weak regularity conditions, the stochastically stable set of states is contained in the set of Nash equilibria, providing a novel rationale for Nash equilibrium behavior. With imitative dynamics, under mild regularity conditions there is a unique stochastically stable state, bit it is not a Nash equilibrium. We consider both forms of dynamics in the contexts of games satisfying strategic substitutes and strategic complements.

Suggested Citation

  • James Bergin & Dan Bernhardt, 1999. "Comparative Dynamics," Working Paper 981, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:981
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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_981.pdf
    File Function: First version 1999
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    Citations

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    Cited by:

    1. Matthey, Astrid, 2010. "Imitation with intention and memory: An experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(5), pages 585-594, October.
    2. Stegeman, Mark & Rhode, Paul, 2004. "Stochastic Darwinian equilibria in small and large populations," Games and Economic Behavior, Elsevier, vol. 49(1), pages 171-214, October.
    3. Alos-Ferrer, Carlos, 2004. "Cournot versus Walras in dynamic oligopolies with memory," International Journal of Industrial Organization, Elsevier, vol. 22(2), pages 193-217, February.

    More about this item

    Keywords

    Strategic Complements; Introspectively Stable; Imitatively Stable; Nash Equilibrium; Relative Equilibrium; Strategic Substitutes;
    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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