Details

Autor(en) / Beteiligte

• Jensen, Mogens
• Sloth, Birgitte
• Whitta-Jacobsen, Hans Jøgen
• Vind, Karl
• Schultz, Christian

Titel

The Evolution of Conventions under Incomplete Information

Ist Teil von

• Institutions, Equilibria and Efficiency, 2006, Vol.25, p.273-293

Ort / Verlag

Germany: Springer Berlin / Heidelberg

Erscheinungsjahr

2006

Quelle

Alma/SFX Local Collection

Beschreibungen/Notizen

• We formulate an evolutionary learning process with trembles for static games of incomplete information. For many games, if the amount of trembling is small, play will be in accordance with the games’ (strict) Bayesian equilibria most of the time supporting the notion of Bayesian equilibrium. Often the process will select a specific equilibrium. For two specific games of economic interest we characterize this selection. The first is an extension to incomplete information of the prototype strategic conflict known as “Chicken”. The second is an incomplete information bilateral monopoly, which is also an extension to incomplete information of Nash’s demand game, or a simple version of the so-called sealed bid double auction. The examples reveal that equilibrium selection by evolutionary learning may well be in favor of Bayesian equilibria where some types of players fail to coordinate, so that the equilibrium outcomes are inefficient.