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When aspiring and rational agents strive to coordinate

Research output: Contribution to journalJournal articlepeer-review

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  • Jaideep Roy
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<mark>Journal publication date</mark>09/2007
<mark>Journal</mark>International Game Theory Review
Issue number3
Volume9
Number of pages16
Pages (from-to)461-476
Publication StatusPublished
<mark>Original language</mark>English

Abstract

The paper studies a game of common interest played infinitely many times between two players, one being aspiration driven while the other being a myopic optimizer. It is shown that the only two long run stationary outcomes are the two static equilibrium points. Robustness of long run behavior is studied to show that whenever the optimizer is allowed to make small mistakes, players are able to coordinate on the Pareto dominant equilibrium point most of the time in the long run if the speed of evolution of aspirations is sufficiently fast. However, when only the aspiring player is allowed to make small mistakes, achieving coordination is inevitable and independent of the speed at which aspirations evolve.