Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 525: Evolution and Refinement with Endogenous Mistake Probabilities

Eric van Damme and Jörgen W. Weibull ()
Additional contact information
Eric van Damme: Tilburg University, Postal: Center for Economic Research
Jörgen W. Weibull: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: Bergin and Lipman (1996) show that the refinement effect from the random mutations in the adaptive population 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 mutation rates as endogenously determined mistake probabilities, by assuming that players with some effort can control the probability of implementing the intended strategy. This is shown to corroborate the results in Kandori-Mailath-Rob (1993) and, under certain regularity conditions, those in Young (1993). The approach also yields a new refinement of the Nash equilibrium concept that is logically independent of Selten's (1975) perfection concept and Myerson's (1978) properness concept.

Keywords: Game theory; Evolutionary game theory; refinement

JEL-codes: C70; C72

22 pages, December 29, 1999

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