Evolutionary stability of behavioural rules in bargaining

Abstract

I study the evolutionary stability of behavioural rules in a bargaining game. Individuals draw random samples of strategies used in the past and respond to it by using a behavioural rule Even though individuals actually respond to historical demands, a necessary condition for stability is the existence of a state such that it is as-if the individuals are hardwired to make the same demand. Furthermore, the state where all individuals demand half of the pie is the unique neutrally stable state; all other states are unstable in the face of an invasion by a mutant behavioural rule.

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Imitation Dynamics in Oligopoly Games with Heterogeneous Players

“…Ref. [17] studies the evolution of bargaining rules (i.e., pie-sharing demands rules) via an external stability argument, by which incumbent rules should do better than mutant demands, reminiscent of the concept of ESS of [18]. To this rule evolution literature, we contribute the study of a threewise ecology of heuristics-naive best-reply, equilibrium (rational) play and imitate-the-average past play-which, to the best of our knowledge, has not been investigated before.…”