Learning and Equilibrium

Posted: 4 Jun 2010

See all articles by Drew Fudenberg

Drew Fudenberg

Massachusetts Institute of Technology (MIT)

David K. Levine

Washington University in St. Louis - Department of Economics; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

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Date Written: January 2009

Abstract

The theory of learning in games explores how, which, and what kind of equilibria might arise as a consequence of a long-run nonequilibrium process of learning, adaptation, and/or imitation. If agents' strategies are completely observed at the end of each round (and agents are randomly matched with a series of anonymous opponents), fairly simple rules perform well in terms of the agent's worst-case payoffs, and also guarantee that any steady state of the system must correspond to an equilibrium. If players do not observe the strategies chosen by their opponents (as in extensive-form games), then learning is consistent with steady states that are not Nash equilibria because players can maintain incorrect beliefs about off-path play. Beliefs can also be incorrect because of cognitive limitations and systematic inferential errors.

Suggested Citation

Fudenberg, Drew and Levine, David K., Learning and Equilibrium (January 2009). Annual Review of Economics, Vol. 1, pp. 385-420, 2009. Available at SSRN: https://ssrn.com/abstract=1598692 or http://dx.doi.org/10.1146/annurev.economics.050708.142930

Drew Fudenberg (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

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David K. Levine

Washington University in St. Louis - Department of Economics ( email )

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European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

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