We study the long-run conventions emerging in a stag-hunt game when agents are myopic best responders. Our main novel assumption is that errors converge to zero at a rate that is positively related to the payoff earned in the past. To fully explore the implications of this error model, we introduce a further novelty in the way we model the interaction structure, assuming that with positive probability agents remain matched together in the next period. We find that, if interactions are sufficiently persistent over time, then the payoff-dominant convention emerges in the long run, while if interactions are quite volatile, then the maximin convention can emerge even if it is not risk-dominant. We contrast these results with those obtained under two alternative error models: uniform mistakes and payoff-dependent mistakes.

The evolution of conventions under condition-dependent mistakes

Bilancini E.;
2019-01-01

Abstract

We study the long-run conventions emerging in a stag-hunt game when agents are myopic best responders. Our main novel assumption is that errors converge to zero at a rate that is positively related to the payoff earned in the past. To fully explore the implications of this error model, we introduce a further novelty in the way we model the interaction structure, assuming that with positive probability agents remain matched together in the next period. We find that, if interactions are sufficiently persistent over time, then the payoff-dominant convention emerges in the long run, while if interactions are quite volatile, then the maximin convention can emerge even if it is not risk-dominant. We contrast these results with those obtained under two alternative error models: uniform mistakes and payoff-dependent mistakes.
2019
Maximin; Payoff-dominant; Risk-dominant; Stag hunt; Stochastic stability
File in questo prodotto:
File Dimensione Formato  
Bilancini-Boncinelli2019_Article_TheEvolutionOfConventionsUnder.pdf

non disponibili

Tipologia: Versione Editoriale (PDF)
Licenza: Nessuna licenza
Dimensione 575 kB
Formato Adobe PDF
575 kB Adobe PDF   Visualizza/Apri   Richiedi una copia

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/20.500.11771/12257
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 19
social impact