A Revision-Game Concept of Stability and Cooperation in Games
From conjectural-variation equilibrium to Riley equilibrium to stable sets and other notions of far-sighted stability, economic theorists have considered various solution concepts in games that take in to account the possibility that players may react to deviations by other players. This paper proposes a revision-games approach to study this problem: players can adjust their actions and react to other players’ adjustments until all players settle on some action profile or, with vanishing probability, the action profile is exogenously frozen. The resulting solution concept is well-defined for all n-player normal-form games and is always nonempty in finite games. It pins down the efficient action profile in coordination games and predicts a unique outcome in the prisoners’ dilemma, which entails a positive amount of cooperation. We discuss predictions in Bertrand competition, matching pennies, and applications to various other games, and explain why three features of our concept (asynchronicity, settlement rule, and Markov refinement), when combined, play a key role to capture collaboration.
Date: 27 October 2023, 14:15 (Friday, 3rd week, Michaelmas 2023)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room G or https://zoom.us/j/93867615769?pwd=VmRJVVRkYlhUajllTEJyd2NsTUs3QT09
Speaker: Bruno Strulovici (Northwestern University)
Organising department: Department of Economics
Part of: Nuffield Economic Theory Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Shreyasi Banerjee