Sophisticated imitation in cyclic games | Zendy

Josef Hofbauer | Zendy; Karl H. Schlag | Zendy

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Sophisticated imitation in cyclic games

Author(s) -

Josef Hofbauer,

Karl H. Schlag

Publication year - 2000

Publication title -

journal of evolutionary economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.767

H-Index - 72

eISSN - 1432-1386

pISSN - 0936-9937

DOI - 10.1007/s001910000049

Subject(s) - imitation , nash equilibrium , matching (statistics) , mathematical economics , population , coordination game , sample (material) , best response , economics , mathematics , econometrics , psychology , statistics , social psychology , demography , physics , sociology , thermodynamics

Individuals belonging to two large populations are repeatedly ran- domly matched to play a cyclic 2 × 2 game such as Matching Pennies. Between matching rounds, individuals sometimes change their strategy after observing a finite sample of other outcomes within their population. Individuals from the same population follow the same behavioral rule. In the resulting discrete time dynamics the unique Nash equilibrium is unstable. However, for sample sizes greater than one, we present an imitation rule where long run play cycles closely around the equilibrium.

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