The paper presents a model of repeated, anonymous play of a 2 × 2 game with two strict Nash equilibria, one of which risk-dominates the other. Stage games differ according to their location in a "social space"; players receive noisy signals of these locations. The dynamics of the model are such that strategy choices, conditional on any signal, gravitate towards whichever strategy maximizes expected utility. Social space need not be uniform. Certain kinds of non-uniformity in social space can allow stationary states in which the two equilibria coexist, each being played in a different region.
|Number of pages
|Journal of Economic Behavior and Organization
|Published - 1 Oct 1995
- Coordination game
- Equilibrium selection