Abstract
We define an evolutionary process of “economic Darwinism” for playing-the-field, symmetric games. The process captures two forces. One is “economic selection”: if current behavior leads to payoff differences, behavior yielding lowest payoff has strictly positive probability of being replaced by an arbitrary behavior. The other is “mutation”: any behavior has at any point in time a strictly positive, very small probability of shifting to an arbitrary behavior. We show that behavior observed frequently is in accordance with “evolutionary equilibrium”, a static equilibrium concept suggested in the literature. Using this result, we demonstrate that generally under positive (negative) externalities, economic Darwinism implies even more under- (over-) activity than does Nash equilibrium
| Original language | English |
|---|---|
| Place of Publication | Cph. |
| Publisher | Centre for Industrial Economics, Department of Economics, University of Copenhagen |
| Number of pages | 24 |
| Publication status | Published - 2006 |
Keywords
- Faculty of Social Sciences
- evolutionary game theory
- Darwinian evolution
- mutation
- economic selection
- evolutionary equilibrium
- stochastic stability