2013/04 | LEM Working Paper Series | |
Simulating Conventions and Norms under Local Interactions and Imitation |
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Sebastian Ille |
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Keywords | ||
Existence and Stability of Equilibria; Evolutionary Games; Behavior; Simulation Modeling
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JEL Classifications | ||
C62, C63, D73, D03, D83
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Abstract | ||
This paper is based on Ille 2013. Both papers analyze the same model,
but in contrast, this paper does not provide an analytical solution
but rather resorts to simulations. This allows the reader, who is
familiar with the former article, to retrace the results more
thoroughly and without the requirement of a sophisticated mathematical
background. Additionally, this paper illustrates the dynamics of the
setting. Focus is placed on 2X2 Nash coordination games on a
two-dimensional lattice. Players imitate the most successful player in
their reference group (Moore neighborhood) in the former
period. Similarly individual pay-o is only dened by the current
strategic choice of this reference group. We observe that the
long-term convention is defined by a trade-off between risk and
efficiency and that player population converges to the Pareto dominant
though risk inferior convention for a broad range of pay-off
congurations. In the case of two player populations, the long-term
convention is defined by the equilibrium granting the highest benet to
one population. Consequently, conventions illustrate a tendency to be
inegalitarian.
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