Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/87540 
Year of Publication: 
2012
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 12-089/I
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
We explore evolutionary dynamics for repeated games with small, but positive complexity costs. To understand the dynamics, we extend a folk theorem result by Cooper (1996) to continuation probabilities, or discount rates, smaller than 1. While this result delineates which payoffs can be supported by neutrally stable strategies, the only strategy that is evolutionarily stable, and has a uniform invasion barrier, is All D. However, with sufficiently small complexity costs, indirect invasions - but now through 'almost neutral' mutants - become an important ingredient of the dynamics. These indirect invasions include stepping stone paths out of full defection.
Subjects: 
repeated games
evolutionary game theory
complexity costs
indirect invasions
robustness against indirect invasions
neutrally stable strategy
evolutionarily stable strategy
iterated prisoners dilemma
JEL: 
C73
Document Type: 
Working Paper

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