SSE/EFI Working Paper Series in Economics and Finance
No 363:
Stochastic Imitation in Finite Games
Jens Josephson ()
and Alexander Matros
Abstract: In this paper we model an evolutionary process with
perpetual random shocks where individual behavior is determined by
imitation. Every period an agent is randomly chosen from each of n finite
populations to play a game. Each agent observes a sample of
population-specific past strategy and payoff realizations. She thereafter
imitates by choosing the strategy with highest average payoff in the
sample. Occasionally the agents also experiment or make mistakes and choose
a strategy at random. For finite n-player games we prove that in the limit,
as the probability of experimentation tends to zero, only strategy-tuples
in minimal sets closed under the better-reply graph will be played with
positive probability. If the strategy-tuples in one such minimal set have
strictly higher payoffs than all outside strategy-tuples, then the
strategy-tuples in this set will be played with probability one in the
limit, provided the minimal set is a product set. We also show that in 2x2
games the convergence in our model is faster than in other known models.
Keywords: Evolutionary game theory; bounded rationality; imitation; Markov chain; stochastic stability; better replies; Pareto dominance; (follow links to similar papers)
JEL-Codes: C72; C73; (follow links to similar papers)
33 pages, March 9, 2000, Revised November 27, 2002
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
hastef0363.pdf 
(244kB)
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
