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Gains in evolutionary dynamics: A unifying and intuitive approach to linking static and dynamic stability

Author

Listed:
  • Dai Zusai

    (Department of Economics, Temple University)

Abstract
This paper presents a universal and economically intuitive approach to linking static and dynamic stability. In economics, static stability is traditionally defined by negative relationship between endogenous and exogenous variables in a model: for a population game, this is characterized by negative semidefiniteness of the Jacobian matrix of the payoff function. We consider economically reasonable dynamics, in which we can justify agents' choices of new strategies as optimal choices possibly by introducing additional costs and constraints. This class of dynamics covers major payoff-based (non-imitative) evolutionary dynamics. The key is expected net gains (payoff improvements) from strategy revisions after paying switching costs. Static stability implies that the aggregate net gain diminishes over time under economic reasonable dynamics and thus can be used as a Lyapunov function. While our analysis here is confined to myopic evolutionary dynamics in population games, our approach is applicable to more complex situations.

Suggested Citation

  • Dai Zusai, 2019. "Gains in evolutionary dynamics: A unifying and intuitive approach to linking static and dynamic stability," DETU Working Papers 1903, Department of Economics, Temple University.
    • Handle: RePEc:tem:wpaper:1903
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    File URL: http://www.cla.temple.edu/RePEc/documents/DETU_19_03.pdf
    File Function: First version, 2019
    Download Restriction: no
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    Cited by:

    1. Lamotte, Raphaël & Geroliminis, Nikolas, 2021. "Monotonicity in the trip scheduling problem," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 14-25.

    More about this item

    Keywords

    evolutionary dynamics; dynamic stability; static stability; evolutionary stable state; Lyapunov function; contractive games;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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