LEARNING TO PLAY APPROXIMATE NASH EQUILIBRIA IN GAMES WITH MANY PLAYERS

Abstract

We illustrate one way in which a population of boundedly rational individuals can learn to play an approximate Nash equilibrium. Players are assumed to make strategy choices using a combination of imitation and innovation. We begin by looking at an imitation dynamic and provide conditions under which play evolves to an imitation equilibrium ; convergence is conditional on the network of social interaction. We then illustrate, through example, how imitation and innovation can complement each other; in particular, we demonstrate how imitation can help a population to learn to play a Nash equilibrium where more rational methods do not. This leads to our main result in which we provide a general class of large game for which the imitation with innovation dynamic almost surely converges to an approximate Nash, imitation equilibrium.imitation ; best reply ; convergence ; Nash equilibrium