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Title:Loss of commitment? An evolutionary analysis of Bagwell's example PDF Logo
Authors:Oechssler, Jörg
Schlag, Karl H.
Issue Date:1997
Series/Report no.:Discussion Papers, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 1997,39
Abstract:In a recent paper Bagwell (1995) pointed out that only the Cournot outcome, but not the Stackelberg outcome, can be supported by a pure Nash equilibrium when actions of the Stackelberg leader are observed with the slightest error. The Stackelberg outcome, however, remains close to the outcome of a mixed equilibrium. We compare the predictions in various classes of evolutionary and learning processes in this game. Only the continuous best response dynamic uniquely selects the Stackelberg outcome under noise. All other dynamics analyzed allow for the Cournot equilibrium to be selected. In typical cases Cournot is the unique long run outcome even for vanishing noise in the signal.
Subjects:imperfectly observable commitment
evolution
imitation
learning
equilibrium selection
JEL:C72
C73
Persistent Identifier of the first edition:urn:nbn:de:kobv:11-10064215
Document Type:Working Paper
Appears in Collections:Discussion Papers, SFB 373, HU Berlin

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