Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108032
Authors: 
Szeidl, Adam
Lee, In Ho
Valentinyi, Akos
Year of Publication: 
2001
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2001/4
Abstract: 
Early results of evolutionary game theory showed that the risk dominant equilibrium is uniquely selected in the long run under the best-response dynamics with mutation. Bergin and Lipman (1996) qualified this result by showing that for a given population size the evolutionary process can select any strict Nash equilibrium if the probability of choosing a nonbest response is state-dependent. This paper shows that the unique selection of the risk dominant equilibrium is robust with respect to state dependent mutation in local interaction games. More precisely, for a given mutation structure there exists a minimum population size beyond which the risk dominant equilibrium is uniquely selected. Our result is driven by contagion and cohesion among players, which exist only in local interaction settings and favor the risk dominant strategy. Our result strengthens the equilibrium selection result of evolutionary game theory.
Subjects: 
contagion
state dependent mutations
risk dominance
local interaction games
JEL: 
C72
D83
Document Type: 
Working Paper

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