Evolution in Finitely Repeated Coordination Games
Victoria University of Wellington - School of Economics & Finance
Games and Economic Behaviour, Vol. 34, pp. 312-330, 2001
I apply a version of Kandori et al. (1993, Econometrica, 61, 29–56) and Young's (1993, Econometrica, 61, 57–84) evolutionary dynamic to finitely repeated coordination games. The dynamic is modified by allowing mutations to affect only off path beliefs. I find that repetition within a match leads agents to sacrifice current payoffs in order to increase payoffs in later stages. As a consequence, evolution leads to (almost) efficiency.
Keywords: Evolution, Finite repetition, Coordination Games, Path beliefs, Repetition, Efficiency
JEL Classification: C79Accepted Paper Series
Date posted: January 27, 2010
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