SSE/EFI Working Paper Series in Economics and Finance
Elias Tsakas and Mark Voorneveld
The target projection dynamic
Abstract: This paper studies the target projection dynamic, which is
a model of myopic adjustment for population games. We put it into the
standard microeconomic framework of utility maximization with control
costs. We also show that it is well-behaved, since it satisfies the
desirable properties: Nash stationarity, positive correlation, and
existence, uniqueness, and continuity of solutions. We also show that,
similarly to other well-behaved dynamics, a general result for elimination
of strictly dominated strategies cannot be established. Instead we rule out
survival of strictly
dominated strategies in certain classes of games.
We relate it to the projection dynamic, by showing that the two dynamics
a subset of the strategy space. We show that strict
equilibria, and evolutionarily stable strategies in $2\times2$ games are
asymptotically stable under the target projection dynamic. Finally, we show
that the stability results that hold under the projection dynamic for
stable games, hold under the target projection dynamic
interior Nash equilibria.
Keywords: target projection dynamic; noncooperative games; adjustment; (follow links to similar papers)
JEL-Codes: C72; (follow links to similar papers)
21 pages, August 13, 2007, Revised August 13, 2007
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