No. 2017-07 - Best reply structure and equilibrium convergence in generic games
Date: 17 March 2018Game theory is widely used as a behavioral model for strategic interactions in biology and social science. It is common practice to assume that players quickly converge to an equilibrium, e.g. a Nash equilibrium. This can be studied in terms of best reply dynamics, in which each player myopically uses the best response to her opponent’s last move. Existing research shows that convergence can be problematic when there are best reply cycles. Here we calculate how typical this is by studying the space of all possible two-player normal form games and counting the frequency of best reply cycles. The two key parameters are the number of moves, which defines how complicated the game is, and the anti-correlation of the payoffs, which determines how competitive it is. We find that as games get more complicated and more competitive, best reply cycles become dominant.
Best reply structure and equilibrium convergence in generic games
Pagallo, M., Heinrich, T. and Farmer, J. D. (2018). "Best reply structure and equilibrium convergence in generic games". INET Oxford Working Paper No. 2017-07.