Stability and Trembles in Extensive-Form Games
9 Pages Posted: 11 Jul 2013 Last revised: 29 Oct 2013
Date Written: October 29, 2013
A leading solution concept in the evolutionary study of extensive-form games is Selten's (1983) notion of limit ESS. We demonstrate that a limit ESS does not imply neutral stability, and that it may be dynamically unstable (almost any small perturbation takes the population away). These problems arise due to an implicit assumption that “mutants” are arbitrarily rare relative to “trembling” incumbents. Finally, we present a novel definition that solves this issue and has appealing properties.
Keywords: Limit ESS, evolutionary stability, extensive-form games
JEL Classification: C73
Suggested Citation: Suggested Citation