Evolutionary Stable Solution Concepts for Initial Play

51 Pages Posted: 8 Aug 2019

See all articles by Terje Lensberg

Terje Lensberg

Norwegian School of Economics (NHH) - Department of Finance

Klaus Reiner Schenk-Hoppé

University of Manchester - Department of Economics; Norwegian School of Economics (NHH) - Department of Finance

Date Written: August 6, 2019

Abstract

We model initial play in bimatrix games by a large population of agents. The agents have individual solution concepts (maps from games to strategy profiles) that they use to solve games. In contrast to evolutionary game theory, where the agents play the same game indefinitely, we consider a setting where they never play the same game twice. Individual solution concepts are represented as computer programs which develop over time by a process of natural selection. We derive an aggregate solution concept (ASC), which converges to a stochastically stable state where the population mean behavior remains constant. The logic and performance of the evolutionary stable ASC is examined in detail, and its solutions to many well-known games are held up against the theoretical and empirical evidence. For example, the ASC selects the "right" solution to traveler's dilemma games, and predicts that the responder will get 40\% of the pie in ultimatum games.

Keywords: Initial play, evolutionary stability, solution concepts, strategy method

JEL Classification: C63, C73, C90

Suggested Citation

Lensberg, Terje and Schenk-Hoppé, Klaus Reiner, Evolutionary Stable Solution Concepts for Initial Play (August 6, 2019). Available at SSRN: https://ssrn.com/abstract=3432903 or http://dx.doi.org/10.2139/ssrn.3432903

Terje Lensberg (Contact Author)

Norwegian School of Economics (NHH) - Department of Finance ( email )

Helleveien 30
Bergen, N-5045
Norway
+47 5595 9206 (Phone)

Klaus Reiner Schenk-Hoppé

University of Manchester - Department of Economics ( email )

Arthur Lewis Building
Oxford Road
Manchester, M13 9PL
United Kingdom

Norwegian School of Economics (NHH) - Department of Finance ( email )

Helleveien 30
N-5045 Bergen
Norway

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