Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 501: Evolution with Mutations Driven by Control Costs

Jörgen W. Weibull () and Eric van Damme
Additional contact information
Jörgen W. Weibull: The Research Institute of Industrial Economics, Postal: P O Box 5501, SE-114 85 Stockholm, Sweden
Eric van Damme: Center for Economic Research, Postal: Tilbury University, P O Box 90153, 5000 LE Tilburg, The Netherlands

Abstract: Bergin and Lipman (1996) show that the refinement effect from the random mutations in the adaptive dynamics in Kandori, Mailath and Rob (1993) and Young (1993) is due to restrictions on how these mutation rates vary across population states. We here model these mutation rates as endogenously determined mistake probabilities, by assuming that players at some cost or disutility can control their mistake probability, i.e., the probability of implementing another pure strategy than intented. This is shown to corroborate the result in Kandori-Mailath-Rob and Young that the risk-dominant equilibrium is selected in 2 x 2-coordination games.

Keywords: Evolution; Game theory; Mutations

JEL-codes: C70; C72

15 pages, August 17, 1998

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