| When does learning in games generate convergence to Nash equilibria? The role of supermodularity in an experimental setting (2004) | |||||||||||||||
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| This study clarifies the conditions under which learning in games produces convergence to Nash equilibria in practice. We experimentally investigate the role of supermodularity, which is closely related to the more familiar concept of strategic complementarities, in achieving convergence through learning. Using a game from the literature on solutions to externalities, we find that supermodular and “nearsupermodular” games converge significantly better than those far below the threshold of supermodularity. From a little below the threshold to the threshold, the improvement is statistically insignificant. Increasing the parameter far beyond the threshold does not significantly improve convergence. (JEL C91, D83) When do players learn to play Nash equilibria? The answer to this important question will help us identify when the outcomes predicted by theory will be realized in competitive environments involving real people. This question has been examined both theoretically (see Drew Fudenberg and David Levine, 1998, for a survey) and experimentally (see Colin Camerer, 2003, for a survey). According to the theoretical literature, games with strategic complementarities (Paul Milgrom and John Roberts, 1991; Milgrom and Chris Shannon, 1994) have robust dynamic stability properties: under numerous learning dynamics, | |||||||||||||||
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