Hysteresis Effects of Changing Parameters of Noncooperative Games

5 Pages Posted: 28 Oct 2010

See all articles by David Wolpert

David Wolpert

Santa Fe Institute

Michael Harre

affiliation not provided to SSRN

Eckehard Olbrich

Max Planck Institute for Mathematics in the Sciences (MPI-MIS)

Nils Bertschinger

Max Planck Institute for Mathematics in the Sciences (MPI-MIS)

Juergen Jost

Max Planck Institute for Mathematics in the Sciences (MPI-MIS)

Date Written: October 27, 2010

Abstract

We adapt the method used by Jaynes to derive the equilibria of statistical physics to instead derive equilibria of bounded rational game theory. We analyze the dependence of these equilibria on the parameters of the underlying game, focusing on hysteresis effects. In particular, we show that by gradually imposing individual-specific tax rates on the players of the game, and then gradually removing those taxes, the players move from a poor equilibrium to one that is better for all of them.

Keywords: Quantal Response Equilibria, Comparitive Statics, Bifurcation Surface, Maximum Entropy

JEL Classification: C70, C72, D60, D70

Suggested Citation

Wolpert, David and Harre, Michael and Olbrich, Eckehard and Bertschinger, Nils and Jost, Juergen, Hysteresis Effects of Changing Parameters of Noncooperative Games (October 27, 2010). Available at SSRN: https://ssrn.com/abstract=1698855 or http://dx.doi.org/10.2139/ssrn.1698855

David Wolpert (Contact Author)

Santa Fe Institute ( email )

1399 Hyde Park Road
Santa Fe, NM 897501
United States

Michael Harre

affiliation not provided to SSRN ( email )

Eckehard Olbrich

Max Planck Institute for Mathematics in the Sciences (MPI-MIS) ( email )

Leipzig
Germany

Nils Bertschinger

Max Planck Institute for Mathematics in the Sciences (MPI-MIS) ( email )

Leipzig
Germany

Juergen Jost

Max Planck Institute for Mathematics in the Sciences (MPI-MIS) ( email )

Leipzig
Germany

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