Learning to Play Nash Equilibrium in Chaotic Dynamics
Event Title
ICDEA 2021
Year (definitive publication)
2021
Language
English
Country
Bosnia and Herzegovina
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Abstract
In a bounded rational game where players cannot be as super-rational as in Kalai and
Leher (1993), are there simple adaptive heuristics or rules that can be used to secure
convergence to Nash equilibria? Robinson (1951) showed that for certain types of games,
such rules exist. Nevertheless, the types of games to which they apply are pretty restric-
tive. Following Hart and Mas-Colell (2003) terminology, are there games with uncoupled
deterministic dynamics in discrete time that converge to Nash equilibrium or not? Young
(2009) argues that if an adaptive learning rule follows three conditions { (i) it is uncoupled,
(ii) each player's choice of action depends solely on the frequency distribution of past play,
and (iii) each player's choice of action, conditional on the state, is deterministic { no such
rule leads the players' behavior to converge to the Nash equilibrium. This paper shows
that there are simple adaptive rules that secure convergence, in fact, fast convergence, in a
fully deterministic and uncoupled game. We use the Cournot model with nonlinear costs
and incomplete information for this purpose and illustrate that this convergence can be
achieved without any coordination of the players' actions.
Acknowledgements
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Keywords
Cournot model,Nash equilibrium,bayesian learning