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Learning to Coordinate whit Heterogeneous Belief-Formation

digital Learning to Coordinate whit Heterogeneous Belief-Formation
Article
journal RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI
issue RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2005 - 3
title Learning to Coordinate whit Heterogeneous Belief-Formation
authors
publisher Vita e Pensiero
format Article | Pdf
online since 2005
issn 0035-676X (print) | 1827-7918 (digital)
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Experiments show that players with identical information and objectives have heterogeneous behavior rules. We formulate how different beliefs arise from the same information and analyze how heterogeneous belief formation affects learning outcomes of two-person two-action coordination games. With heterogeneous belief formation, it is possible to generate enough diversity in actions for eventual coordination, which is impossible under the ordinary adaptive learning model. When each player uses the same function to compute a belief over time, diversity of belief formation functions within or across populations is suffcient for convergence to coordination. When players choose belief-formation functions as well as actions over time, diverse adjustment of belief-formation functions is suffcient. A risk-dominant equilibrium is more likely to emerge than a payoff-dominant equilibrium since the former is more likely to be predicted by the players.

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