Positive feedback in coordination games: stochastic evolutionary dynamics and the logit choice rule

DOI10.1016/J.GEB.2021.01.003zbMATH Open1458.91032arXiv1701.04870OpenAlexW3126015425MaRDI QIDQ1995492FDOQ1995492

Luc Rey-Bellet, Sung-Ha Hwang

Publication date: 23 February 2021

Published in: Games and Economic Behavior (Search for Journal in Brave)

Abstract: We study the problem of stochastic stability for evolutionary dynamics under the logit choice rule. We consider general classes of coordination games, symmetric or asymmetric, with an arbitrary number of strategies, which satisfies the marginal bandwagon property (i.e., there is positive feedback to coordinate). Our main result is that the most likely evolutionary escape paths from a status quo convention consist of a series of identical mistakes. As an application of our result, we show that the Nash bargaining solution arises as the long run convention for the evolutionary Nash demand game under the usual logit choice rule. We also obtain a new bargaining solution if the logit choice rule is combined with intentional idiosyncratic plays. The new bargaining solution is more egalitarian than the Nash bargaining solution, demonstrating that intentionality implies equality under the logit choice model.

Full work available at URL: https://arxiv.org/abs/1701.04870

zbMATH Keywords

evolutionary gamesNash bargaining solutionpositive feedbackstochastic stabilityexit problemslogit choice rulesmarginal bandwagon propertyNash demand games

Mathematics Subject Classification ID

Auctions, bargaining, bidding and selling, and other market models (91B26) Evolutionary games (91A22)

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Cited In (3)

• Expected utility versus cumulative prospect theory in an evolutionary model of bargaining
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