Experimentation, Imitation, and Stochastic Stability

Douglas Gale, Robert W. Rosenthal

    Research output: Contribution to journalArticle

    Abstract

    Do boundedly rational agents repeatedly playing a symmetric game with a unique symmetric equilibrium learn over time to play it? In this paper we model the dynamic interaction of two types of such agents, experimenters and imitators, whose behavior is characterized by simple rules of thumb. We find that the stochastic process describing their play isstable in the large: it converges globally and with probability one to a compact neighborhood of the equilibrium. However, its local behavior near the equilibrium depends in interesting ways on the details of the model.Journal of Economic LiteratureClassification Number: D83.

    Original languageEnglish (US)
    Pages (from-to)1-40
    Number of pages40
    JournalJournal of Economic Theory
    Volume84
    Issue number1
    DOIs
    StatePublished - Jan 1999

    Fingerprint

    Imitation
    Experimentation
    Stochastic stability
    Economics
    Simple rules
    Symmetric games
    Interaction
    Rules of thumb
    Stochastic processes

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Experimentation, Imitation, and Stochastic Stability. / Gale, Douglas; Rosenthal, Robert W.

    In: Journal of Economic Theory, Vol. 84, No. 1, 01.1999, p. 1-40.

    Research output: Contribution to journalArticle

    Gale, Douglas ; Rosenthal, Robert W. / Experimentation, Imitation, and Stochastic Stability. In: Journal of Economic Theory. 1999 ; Vol. 84, No. 1. pp. 1-40.
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