Perfect foresight dynamics in binary supermodular games

Authors


  • Some of the results in this paper were reported in a working paper, Oyama, Takahashi, and Hofbauer (2003). D. Oyama acknowledges a Grant-in-Aid for JSPS Fellows. J. Hofbauer acknowledges support from UCL’s Centre for Economic Learning and Social Evolution and the Vienna Science and Technology Fund (grant WWTF-MA09-017).

Abstract

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.

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