Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Jan, 1993, Volume 61, Issue 1

Learning, Mutation, and Long Run Equilibria in Games<29:LMALRE>2.0.CO;2-F
p. 29-56

George J. Mailath, Michihiro Kandori, Rafael Rob

We analyze an evolutionary model with a finite number of players and with noise or mutations. The expansion and contraction of strategies is linked--as usual--to their current relative success, but mutations--which perturb the system away from its deterministic evolution--are present as well. Mutations can occur in every period, so the focus is on the implications of ongoing mutations, not a one-shot mutation. The effect of these mutations is to drastically reduce the set of equilibria to what we term "long-run equilibria." For $2 \times 2$ symmetric games with two symmetric strict Nash equilibria the equilibrium selected satisfies (for large populations) Harsanyi and Selten's (1988) criterion of risk-dominance. In particular, if both strategies have equal security levels, the Pareto dominant Nash equilibrium is selected, even though there is another strict Nash equilibrium.

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