Refined Best-Response Correspondence and Dynamics
27 Pages Posted: 6 Feb 2008 Last revised: 15 Jul 2011
Date Written: October 9, 2009
We call a correspondence, defined on the set of mixed strategy profiles, a generalized best-reply correspondence if it has (1) a product structure, is (2) upper hemi--continuous, (3) always includes a best-reply to any mixed strategy profile, and is (4) convex- and closed-valued. For each generalized best-reply correspondence we define a generalized best-reply dynamics as a differential inclusion based on it. We call a face of the set of mixed strategy profiles a minimally asymptotically stable face (MASF) if it is asymptotically stable under some such dynamics and no subface of it is asymptotically stable under any such dynamics. The set of such correspondences (and dynamics) is endowed with the partial order of point-wise set-inclusion and, under a mild condition on the normal form of the game at hand, forms a complete lattice with meets based on point-wise intersections. The refined best-reply correspondence is then defined as the smallest element of the set of all generalized best-reply correspondences. We ultimately find that every Kalai and Samet's (1984) persistent retract, which coincide with Basu and Weibull's (1991) CURB sets based, however, on the refined best-reply correspondence, contains a MASF. Conversely, every MASF must be a Voorneveld's (2004) prep set, again, however, based on the refined best-reply correspondence.
Keywords: evolutionary game theory, best response dynamics, CURB sets, persistent retracts, asymptotic stability, Nash equilibrium refinements, learning
JEL Classification: C62, C72, C73
Suggested Citation: Suggested Citation