Type: Working Paper
Stochastic Stability in Binary Choice Coordination Games
Working Paper, EUI MWP, 2011/02
STAUDIGL, Mathias, Stochastic Stability in Binary Choice Coordination Games, EUI MWP, 2011/02 - https://hdl.handle.net/1814/16074
Retrieved from Cadmus, EUI Research Repository
Recent literature in evolutionary game theory is devoted to the question of robust equilibrium selection under noisy best-response dynamics. In this paper we present a complete picture of equilibrium selection for asymmetric binary choice coordination games in the small noise limit. We achieve this by transforming the stochastic stability analysis into an optimal control problem, which can be solved generally. This approach allows us to obtain precise and clean equilibrium selection results for all canonical noisy best-response dynamics which have been proposed so far in the literature, among which we find the best-response with mutations dynamics, the logit dynamics and the probit dynamics. Thereby we provide a complete answer to the equilibrium selection problem in general binary choice coordination games.
Cadmus permanent link: https://hdl.handle.net/1814/16074
Series/Number: EUI MWP; 2011/02