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Positive feedback in coordination games: Stochastic evolutionary dynamics and the logit choice rule

GAMES AND ECONOMIC BEHAVIOR2021-03

Hwang, Sung-Ha | Rey-Bellet, Luc

We study the problem of stochastic stability for evolutionary dynamics under the logit choice rule. We consider general classes of coordination games, symmetric or asymmetric, with an arbitrary number of strategies, which satisfies the marginal bandwagon property (i.e., there is positive feedback to coordinate). Our main result is that the most likely evolutionary escape paths from a status quo convention consist of a series of identical mistakes. As an application of our result, we show that the Nash bargaining solution arises as the long run convention for the evolutionary Nash demand game under the usual logit choice rule. We also obtain a new bargaining solution if the logit choice rule is combined with intentional idiosyncratic plays. The new bargaining solution is more egalitarian than the Nash bargaining solution, demonstrating that intentionality implies equality under the logit choice model. ⓒ 2021 Elsevier Inc.

Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
Issue Date
2021-03
Article Type
Article
Citation
GAMES AND ECONOMIC BEHAVIOR, Vol.126, pp.355 - 373
ISSN
0899-8256
DOI
10.1016/j.geb.2021.01.003
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