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Evolutionary Drift and Equilibrium Selection

Author

Listed:
  • Ken Binmore
  • Larry Samuelson
Abstract
This paper develops an approach to equilibrium selection in game theory based on studying the equilibriating process through which equilibrium is achieved. The differential equations derived from models of interactive learning typically have stationary states that are not isolated. Instead, Nash equilibria that specify the same behavior on the equilibrium path, but different out-of-equilibrium behavior, appear in connected components of stationary states. The stability properties of these components often depend critically on the perturbations to which the system is subjected. We argue that it is then important to incorporate such drift into the model. A suffcient condition is provided for drift to create stationary states with strong stability properties near a component of equilibria. This result is used to derive comparative static predictions concerning common questions raised in the literature on refinements of Nash equilibrium

Suggested Citation

  • Ken Binmore & Larry Samuelson, "undated". "Evolutionary Drift and Equilibrium Selection," ELSE working papers 011, ESRC Centre on Economics Learning and Social Evolution.
    • Handle: RePEc:els:esrcls:011
    as

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    File URL: ftp://ftp.repec.org/RePEc/els/esrcls/cheap.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Evolutionary Games; Cheap Talk; Stability; Drift.;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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