Equilibria Resistant to Mutation

The paper requires that equilibrium behavior for two person symmetric games be resistant to genetic evolution. In particular the paper assumes that the evolution of genotypes selecting a behavioral rule can be described according to some generalization of the replicator model. This paper defines an equilibrium concept, 'evolutionary equilibrium', which is defined as the limit of stationary points of the evolutionary process as the proportion of the population that mutates goes to zero. Then the set of evolutionary equilibria, as defined in the paper, is a nonempty subset of the set of perfect equilibria (and thus of the set of Nash equilibria) and a superset of the set of regular equilibria and the set of ESS

Equilibria Resistant to Mutation

The paper requires that equilibrium behavior for two person symmetric games be resistant to genetic evolution. In particular the paper assumes that the evolution of genotypes selecting a behavioral rule can be described according to some generalization of the replicator model. This paper defines an equilibrium concept, 'evolutionary equilibrium', which is defined as the limit of stationary points of the evolutionary process as the proportion of the population that mutates goes to zero. Then the set of evolutionary equilibria, as defined in the paper, is a nonempty subset of the set of perfect equilibria (and thus of the set of Nash equilibria) and a superset of the set of regular equilibria and the set of ESS

Evolutionarily stable networks

This paper studies the evolution of behavior governing strategic network formation. I first propose a general framework of evolutionary selection in non-cooperative games played in heterogeneous groups under assortative matching. I show that evolution selects strate-gies that (i) execute altruistic actions towards others in the interaction group with rate of altruism equal to the rate of assortative matching and (ii) are stable against pairwise coali-tional deviations under two qualifications: pairs successfully coordinate their deviations with probability equaling the rate of assortative matching and externalities are taken into account with the same weight. I then restrict the domain of interaction games to strategic network formation and define a new stability concept for networks called ‘evolutionarily stable networks’. The concept fuses ideas of solution concepts used by evolutionary game theory and network formation games. In a game of communication, evolutionarily stable networks prescribe equal information access. In the classic co-authorship game only the least efficient network, the complete network, is evolutionarily stable. Finally, I present an evolutionary model of homophilistic network formation between identity groups and show that extreme high degrees of homophily may persist even in groups with virtually no preference for it; thus societies may struggle to eliminate segregation between identity groups despite becoming increasingly tolerant

A theory of bailouts of firms and enterprises, with evidence from Polish industry.

This thesis examines a number of aspects of a government policy of rescuing firms or enterprises that are in difficulties, with particular attention to the East European context. The first part of Chapter 2 examines a concept introduced by Janos Kornai, the "soft budget constraint", and argues that it should be interpreted as a state policy of bailouts of enterprises in financial difficulties. The second part of the chapter examines the effect on incentives of a state policy of bailouts, arguing that in principle a bailout policy has an ambiguous effect on enterprise performance. Chapter 3 looks at the causes behind a government policy of bailouts. A game-theoretic model is presented in support of the argument that a cause of a bailout policy may be that the government is unable to make a credible commitment not to bail out an enterprise. The model also shows that if the government can acquire a "reputation for toughness", its threat of "no bailouts" may be credible. The phenomenon of "storming" or rush-work to meet a deadline is also analysed. In Chapter 4 a model of economic natural selection is developed. The model demonstrates that profit-maximisation does not "summarise appropriately" the conditions for firm survival. If firms have market power, profit-maximisers are not necessarily the best survivors. The economic model presented derives from the biologists' "evolutionarily stable strategy" (ESS) model. An appendix presents a version of the ESS model for finite populations. Finally, the thesis looks at empirical evidence on financial bailouts using data from the 500 largest enterprises in Polish industry, 1983-88. Chapter 5 discusses the data and the tax/subsidy system. Chapter 6 looks at how these enterprises were subsidised, and presents evidence, based on econometric estimates of government subsidy policy, that subsidies were used to rescue loss-making enterprises