Multiplicity and Sensitivity of Stochastically Stable Equilibria in Coordination Games

Abstract

We investigate the equilibrium selection problem in n-person binary coordination games by means of the adaptive play with mistakes (Young 1993). We show that whenever the difference between the deviation losses of respective equilibria is not overwhelming, the stochastic stability exhibits a notable dependence on payoff parameters associated with strategy profiles where the numbers of players for the respective strategies are nearly equal. This feature necessitates the existence of games that possess multiple stochastically stable equilibria.Equilibrium selection, stochastic stability, unanimity game, coordination game