Economic Darwinism

B. Sloth, Hans Jørgen Whitta-Jacobsen

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

We define an evolutionary process of "economic Darwinism" for playing the field, symmetric games. The process captures two forces. One is "economic selection": if current behavior leads to payoff differences, behavior yielding lowest payoff has strictly positive probability of being replaced by an arbitrary behavior. The other is "mutation": any behavior has at any point in time a strictly positive, very small probability of shifting to an arbitrary behavior. We show that behavior observed frequently is in accordance with "evolutionary equilibrium", a static equilibrium concept suggested in the literature. Using this result, we demonstrate that generally under positive (negative) externalities, economic Darwinism implies even more under- (over-)activity than does Nash equilibrium.
Original languageEnglish
JournalTheory and Decision
Volume70
Issue number3
Pages (from-to)385-398
Number of pages14
ISSN0040-5833
DOIs
Publication statusPublished - 2011

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