Oyama, Daisuke and Takahashi, Satoru and Hofbauer, Josef (2003): Monotone Methods for Equilibrium Selection under Perfect Foresight Dynamics.
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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.
|Item Type:||MPRA Paper|
|Original Title:||Monotone Methods for Equilibrium Selection under Perfect Foresight Dynamics|
|Keywords:||equilibrium selection; perfect foresight dynamics; supermodular game; strategic complementarity; stochastic dominance; potential; monotone potential|
|Subjects:||C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games ; Evolutionary Games ; Repeated Games
|Depositing User:||Daisuke Oyama|
|Date Deposited:||13. Jan 2008 14:54|
|Last Modified:||25. Feb 2015 14:24|
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