On the Elimination of Dominated Strategies in Stochastic Models of Evolution With Large Populations

33 Pages Posted: 21 Mar 2007 Last revised: 12 Feb 2010

See all articles by Christoph Kuzmics

Christoph Kuzmics

University of Graz - Department of Economics

Date Written: February 9, 2010

Abstract

A stochastic myopic best-reply dynamics is said to have property (W), for a given number of players $n$, if every pure weakly dominated strategy in every $n$-player game is eliminated in the long-run distribution of play induced by the dynamics. In this paper I give a necessary and sufficient condition that a dynamics has to satisfy in order for it to have property (W). The key determinant is found to be the sensitivity of the learning-rate to small payoff differences, inherent in the dynamics. If this sensitivity is higher than a certain cut-off, which depends on the number of players, then the dynamics satisfies property (W). If it is equal to or below that cut-off, then the dynamics does not satisfy property (W).

Keywords: learning, experimentation, S^{\infty}W-procedure, weak dominance, iterated strict dominance

JEL Classification: C62, C72, C73

Suggested Citation

Kuzmics, Christoph, On the Elimination of Dominated Strategies in Stochastic Models of Evolution With Large Populations (February 9, 2010). Available at SSRN: https://ssrn.com/abstract=970319 or http://dx.doi.org/10.2139/ssrn.970319

Christoph Kuzmics (Contact Author)

University of Graz - Department of Economics ( email )

Universitaetsstrasse 15
RESOWI - F4
Graz, 8010
Austria

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