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Escape dynamics and equilibria selection by iterative cycle decomposition |
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| Authors: | Zhiwei Cui Jian Zhai |
| Affiliation: | a Department of Mathematics, Zhejiang University, Hangzhou 310027, PR China;b School of Economics and Management, Beijing University of Aeronautics & Astronautics, Beijing 100191, PR China;c Center of Neuroscience and Informatics, Department of Mathematics, Zhejiang University, Hangzhou 310027, PR China |
| Abstract: | This paper explores the medium-run behaviour of bounded rational players in repeatedly played games when they occasionally experiment or make mistakes. The formal analysis introduces a hierarchical structure of limit sets to characterize the most possible medium-run behaviour over gradually increased time intervals. The paper refines the notion of stochastic stability and offers a precise measure of the speed at which stochastically stable equilibria occur. Finally, the paper applies the results to a 3×3 symmetric game of Young (1993). |
| Keywords: | Adaptive learning dynamics in games Escape dynamics Iterative cycle decomposition Stochastic stability |
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