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Perfect foresight dynamics in binary supermodular games
Author(s) -
Oyama Daisuke,
Takahashi Satoru,
Hofbauer Josef
Publication year - 2011
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2011.00162.x
Subject(s) - mathematical economics , nash equilibrium , equilibrium selection , futures studies , unanimity , economics , binary number , class (philosophy) , best response , mathematics , selection (genetic algorithm) , invariant (physics) , diagonal , subgame perfect equilibrium , epsilon equilibrium , game theory , computer science , repeated game , statistics , geometry , arithmetic , artificial intelligence , political science , law , mathematical physics
The present paper considers equilibrium selection in binary supermodular games based on perfect foresight dynamics. We provide complete characterizations of absorbing and globally accessible equilibria and apply them to two subclasses of games. First, for unanimity games , it is shown that our selection criterion is not in agreement with that in terms of Nash products, and an example is presented in which two strict Nash equilibria are simultaneously globally accessible when the friction is sufficiently small. Second, a class of games with invariant diagonal are proposed and shown to generically admit an absorbing and globally accessible equilibrium for small frictions.