This paper introduces a new coordination problem for a large but finite population – The Language Game. The population is partitioned into two groups of identical agents. Each player shares a common two-action strategy set and interacts pairwise with everyone else. Both symmetric profiles are...

An individualʼs learning rule is completely uncoupled if it does not depend directly on the actions or payoffs of anyone else. We propose a variant of log linear learning that is completely uncoupled and that selects an efficient (welfare-maximizing) pure Nash equilibrium in all generic...

We study whether allowing players to sign binding contracts governing future play leads to reputation effects in repeated games with long-run players. We proceed by extending the analysis of Abreu and Pearce (2007) by allowing for the possibility that different behavioral types may not be...

A recent literature in evolutionary game theory is devoted to the question of robust equilibrium selection under noisy best-response dynamics. In this paper we present a complete picture of equilibrium selection for asymmetric binary choice coordination games in the small noise limit. We achieve...

We experimentally assess the predictive power of two equilibrium selection principles for binary N-player entry games with strategic complementarities. In static entry games, we test the theory of global games which posits that players play games of complete information as if they were playing a...

This paper explores how a change in a default—specifically, an exogenously given reference point—affects individual preferences. While reference dependence is extensively studied, very little is known regarding the impact of reference points on individual choice behavior when the reference...

We study the problem of risk sharing within a household or syndicate. A household shares risky prospects using a social welfare functional. We characterize the social welfare functionals such that the household is collectively less risk averse than each member, and satisfies the Pareto principle...

We study a stochastic version of Fudenberg–Tirole's preemption game. Two firms contemplate entering a new market with stochastic demand. Firms differ in sunk costs of entry. If the demand process has no upward jumps, the low cost firm enters first, and the high cost firm follows. If leader's...

A population of fully rational agents plays a symmetric 2-player game in biological fitnesses, but each agentʼs play is determined by his payoffs, which are free to evolve according to “survival of the fittest” pressures. An equilibrium-selection mechanism is assumed to exist, and deliver a...

We consider the dynamics of reasoning by general rules (theories) and by specific cases (analogies). When an agent faces an exogenous process, we show that, under mild conditions, if reality happens to be simple, the agent will converge to adopt a theory and discard analogical thinking. If,...