[J6] - Higher-order game dynamics

R. Laraki and P. Mertikopoulos. Journal of Economic Theory, vol. 148, no. 6, pp. 2666–2695, November 2013.

Abstract

Continuous-time dynamics for games are typically first order systems where payoffs determine the growth rate of the players’ strategy shares. In this paper, we investigate what happens beyond first order by viewing payoffs as higher order forces of change, specifying e.g. the acceleration of the players’ evolution instead of its velocity (a viewpoint which emerges naturally when it comes to aggregating empirical data of past instances of play). To that end, we derive a wide class of higher order game dynamics, generalizing first order imitative dynamics, and, in particular, the replicator dynamics. We show that strictly dominated strategies become extinct in n-th order payoff-monotonic dynamics n orders as fast as in the corresponding first order dynamics; furthermore, in stark contrast to first order, weakly dominated strategies also become extinct for n ≥ 2. All in all, higher order payoff-monotonic dynamics lead to the elimination of weakly dominated strategies, followed by the iterated deletion of strictly dominated strategies, thus providing a dynamic justification of the well-known epistemic rationalizability process of Dekel and Fudenberg (1990). Finally, we also establish a higher order analogue of the folk theorem of evolutionary game theory, and we show that convergence to strict equilibria in n-th order dynamics is n orders as fast as in first order.

arXiv link: https://arxiv.org/abs/1206.4181

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