Equilibrium selection in coordination games with simultaneous play |
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Authors: | Per Svejstrup Hansen Oddvar M Kaarbøe |
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Institution: | (1) Unit of Economics, The Royal Veterinary and Agricultural University, Frederiksberg, DENMARK(e-mail: psh@kvl.dk) , DK;(2) Department of Economics and HEB, University of Bergen, Fosswinckelsgate 6,5007 Bergen, NORWAY (e-mail: oddvar.kaarboe@econ.uib.no) , NO |
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Abstract: | Summary. We apply the dynamic stochastic framework proposed in recent evolutionary literature to a class of coordination games played
simultaneously by the entire population. In these games payoffs, and hence best replies, are determined by a summary statistic
of the population strategy profile. We demonstrate that with simultaneous play, the equilibrium selection depends crucially
on how best responses to the summary statistic remain piece-wise constant. In fact, all the strict Nash equilibria in the
underlying stage game can be made stochastically stable depending on how the best response mapping generates piece-wise constant
best responses.
Received: February 12, 2001; revised version: October 29, 2001 |
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Keywords: | and Phrases: Coordination Equilibrium selection Market games |
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