Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89307
Authors: 
Dindo, Pietro
Tuinstra, Jan
Year of Publication: 
2010
Series/Report no.: 
LEM Working Paper Series 2010/14
Abstract: 
We introduce a framework to analyze the interaction of boundedly rational heterogeneous agents repeatedly playing a participation game with negative feedback. We assume that agents use different behavioral rules prescribing how to play the game conditionally on the outcome of previous rounds. We update the fraction of the population using each rule by means of a general class of evolutionary dynamics based on imitation, which contains both replicator and logit dynamics. Our model is analyzed by a combination of formal analysis and numerical simulations and is able to replicate results from the experimental and computational literature on these types of games. In particular, irrespective of the specific evolutionary dynamics and of the exact behavioral rules used, the dynamics of the aggregate participation rate is consistent with the symmetric mixed strategy Nash equilibrium, whereas individual behavior clearly departs from it. Moreover, as the number of players or speed of adjustment increase the evolutionary dynamics typically becomes unstable and leads to endogenous fluctuations around the steady state. These fluctuations are robust with respect to behavioral rules that try to exploit them.
Subjects: 
Participation games
Heterogeneous behavioral rules
Revision protocol
Replicator Dynamics
Logit Dynamics
Nonlinear dynamics
JEL: 
C72
C73
Document Type: 
Working Paper

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