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Equilibrium Selection under Different Learning Modes in Supermodular Games

Author

Listed:
  • Oddvar M. Kaarboe

    (University of Bergen)

  • Alexander F. Tieman

    (Vrije Universiteit Amsterdam)

Abstract

We apply the dynamic stochastic framework proposed by recent evolutionaryliterature to the class of strict supermodular games when two simplebehavior rules coexist in the population, imitation and myopic optimization.We assume that myopic optimizers are able to see how well their payoff doesrelative to what they can get in the stage game and therefore experimentmore in low payoff states. A clear-cut equilibrium selection result isobtained: the payoff dominant equilibrium emerges as the unique long runequilibrium. Furthermore, the expected waiting time until the payoffdominant equilibrium is reached is relatively short, even in the limit asthe population size grows large.

Suggested Citation

  • Oddvar M. Kaarboe & Alexander F. Tieman, 1999. "Equilibrium Selection under Different Learning Modes in Supermodular Games," Tinbergen Institute Discussion Papers 99-061/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:19990061
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    Cited by:

    1. Schipper, Burkhard C., 2009. "Imitators and optimizers in Cournot oligopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 33(12), pages 1981-1990, December.
    2. Josephson, Jens, 2009. "Stochastic adaptation in finite games played by heterogeneous populations," Journal of Economic Dynamics and Control, Elsevier, vol. 33(8), pages 1543-1554, August.
    3. Oddvar M. Kaarbøe & Alexander F. Tieman, 0000. "Equilibrium Selection in Games with Macroeconomic Complementarities," Tinbergen Institute Discussion Papers 99-096/1, Tinbergen Institute.
    4. Napel, Stefan, 2003. "Aspiration adaptation in the ultimatum minigame," Games and Economic Behavior, Elsevier, vol. 43(1), pages 86-106, April.

    More about this item

    Keywords

    Evolution; Imitation; Myopic Optimization; Payoff Dominant Equilibrium;
    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
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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