Endogenous selection of aspiring and rational rules in coordination games

The paper studies an evolutionary model where players from a given population are randomly matched in pairs each period to play a co- ordination game. At each instant, a player can choose to adopt one of the two possible behavior rules, called the rational rule and the as- piring rule, and then take actions prescribed by the chosen rule. The choice between the two rules depends upon their relative performance in the immediate past. We show that there are two stable long run outcomes where either the rational rule becomes extinct and all play- ers in the population achieve full eciency, or that both the behavior rules co-exist and there is only a partial use of ecient strategies in the population. These ndings support the use of the aspiration driven behavior in several existing studies and also help us take a comparative evolutionary look at the two rules in retrospect.Co-evolution, Aspirations, Best-response, Random matching, Coordination games

Congestion phenomena caused by matching pennies in evolutionary games

Evolutionary social dilemma games are extended by an additional matching-pennies game that modifies the collected payoffs. In a spatial version players are distributed on a square lattice and interact with their neighbors. Firstly, we show that the matching-pennies game can be considered as the microscopic force of the Red Queen effect that breaks the detailed balance and induces eddies in the microscopic probability currents if the strategy update is analogous to the Glauber dynamics for the kinetic Ising models. The resulting loops in probability current breaks symmetry between the chessboard-like arrangements of strategies via a bottleneck effect occurring along the four-edge loops in the microscopic states. The impact of this congestion is analogous to the application of a staggered magnetic field in the Ising model, that is, the order-disorder critical transition is wiped out by noise. It is illustrated that the congestion induced symmetry breaking can be beneficial for the whole community within a certain region of parameters.Comment: 7 pages, 6 figure

More order with less law: on contract enforcement, trust, and crowding

Most contracts, whether between voters and politicians or between house owners and contractors, are incomplete. “More law,” it typically is assumed, increases the likelihood of contract performance by increasing the probability of enforcement and/or the cost of breach. We examine a contractual relationship in which the first mover has to decide whether she wants to enter a contract without knowing whether the second mover will perform. We analyze how contract enforceability affects individual performance for exogenous preferences. Then we apply a dynamic model of preference adaptation and find that economic incentives have a nonmonotonic effect on behavior. Individuals perform a contract when enforcement is strong or weak but not with medium enforcement probabilities: Trustworthiness is “crowded in” with weak and “crowded out” with medium enforcement. In a laboratory experiment we test our model’s implications and find support for the crowding prediction. Our finding is in line with the recent work on the role of contract enforcement and trust in formerly Communist countries

Evolutionary dynamics in heterogeneous populations: a general framework for an arbitrary type distribution

A general framework of evolutionary dynamics under heterogeneous populations is presented. The framework allows continuously many types of heterogeneous agents, heterogeneity both in payoff functions and in revision protocols and the entire joint distribution of strategies and types to influence the payoffs of agents. We clarify regularity conditions for the unique existence of a solution trajectory and for the existence of equilibrium. We confirm that equilibrium stationarity in general and equilibrium stability in potential games are extended from the homogeneous setting to the heterogeneous setting. In particular, a wide class of admissible dynamics share the same set of locally stable equilibria in a potential game through local maximization of the potential

Threshold games and cooperation on multiplayer graphs

Objective: The study investigates the effect on cooperation in multiplayer games, when the population from which all individuals are drawn is structured - i.e. when a given individual is only competing with a small subset of the entire population. Method: To optimize the focus on multiplayer effects, a class of games were chosen for which the payoff depends nonlinearly on the number of cooperators - this ensures that the game cannot be represented as a sum of pair-wise interactions, and increases the likelihood of observing behaviour different from that seen in two-player games. The chosen class of games are named "threshold games", and are defined by a threshold, $M > 0$, which describes the minimal number of cooperators in a given match required for all the participants to receive a benefit. The model was studied primarily through numerical simulations of large populations of individuals, each with interaction neighbourhoods described by various classes of networks. Results: When comparing the level of cooperation in a structured population to the mean-field model, we find that most types of structure lead to a decrease in cooperation. This is both interesting and novel, simply due to the generality and breadth of relevance of the model - it is likely that any model with similar payoff structure exhibits related behaviour. More importantly, we find that the details of the behaviour depends to a large extent on the size of the immediate neighbourhoods of the individuals, as dictated by the network structure. In effect, the players behave as if they are part of a much smaller, fully mixed, population, which we suggest an expression for.Comment: in PLOS ONE, 4th Feb 201

Agent-Based Models and Human Subject Experiments

This paper considers the relationship between agent-based modeling and economic decision-making experiments with human subjects. Both approaches exploit controlled ``laboratory'' conditions as a means of isolating the sources of aggregate phenomena. Research findings from laboratory studies of human subject behavior have inspired studies using artificial agents in ``computational laboratories'' and vice versa. In certain cases, both methods have been used to examine the same phenomenon. The focus of this paper is on the empirical validity of agent-based modeling approaches in terms of explaining data from human subject experiments. We also point out synergies between the two methodologies that have been exploited as well as promising new possibilities.agent-based models, human subject experiments, zero- intelligence agents, learning, evolutionary algorithms

Global versus local interaction in coordination games: an experimental investigation.

We study experimentally the outcome of a 50 periods repetition of a two-player coordination game, which admits two-pure strategy Nash equilibria that are Pareto-ranked: a payoff-dominant equilibrium and a risk-dominant equilibrium. The experiment consists of a 2x3 factorial design, with two different matching rules –global an local interaction–, and three sizes for the basin of attraction of the risk-dominant equilibrium. Under global interaction, each player can be matched in each period with any player in the population. Under local interaction, each player can be matched only with one of his two neighbours. Our results confirm earlier experimental results obtained under global interaction (for a survey see Ochs (1995)). On the contrary, the results contrast sharply with Keser, Ehrhart & Berninghaus (1998), who found that subjects interacting ‘locally’ with their neighbours around a circle, coordinate mostly on the risk-dominant equilibrium. Moreover, we found no evidence for a faster convergence to an equilibrium under local interaction than under global interaction. Keywords: Coordination games, Experimental economics, Evolutionary game theory, Local interactions

Evolutionary game theory: Temporal and spatial effects beyond replicator dynamics

Evolutionary game dynamics is one of the most fruitful frameworks for studying evolution in different disciplines, from Biology to Economics. Within this context, the approach of choice for many researchers is the so-called replicator equation, that describes mathematically the idea that those individuals performing better have more offspring and thus their frequency in the population grows. While very many interesting results have been obtained with this equation in the three decades elapsed since it was first proposed, it is important to realize the limits of its applicability. One particularly relevant issue in this respect is that of non-mean-field effects, that may arise from temporal fluctuations or from spatial correlations, both neglected in the replicator equation. This review discusses these temporal and spatial effects focusing on the non-trivial modifications they induce when compared to the outcome of replicator dynamics. Alongside this question, the hypothesis of linearity and its relation to the choice of the rule for strategy update is also analyzed. The discussion is presented in terms of the emergence of cooperation, as one of the current key problems in Biology and in other disciplines.Comment: Review, 48 pages, 26 figure