Abstract
This paper studies the behavior of the genetic algorithm in coordination games with strategic uncertainty that are characterized by the multiplicity of equilibria. The main objectives are to examine whether the genetic algorithm adaptation leads to coordination and what the long run properties of the dynamics are. The genetic algorithm behavior is compared to the evidence from the experiments with human subjects. The adaptation of genetic algorithm players results in coordination on an equilibrium. Which equilibrium is selected depends on the group size. The analysis of the long-run properties of the dynamics show that, as a result of the continuing effects of the genetic drift, the genetic algorithm can reach any of the equilibria of the game regardless of the group size. Simulations with large group treatments spend most of the time in Pareto-inferior equilibria, while simulations with small group treatments spend most of the time in Pareto-superior equilibria of the game.
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Arifovic, J. (1997). Strategic Uncertainty and the Genetic Algorithm Adaptation. In: Amman, H., Rustem, B., Whinston, A. (eds) Computational Approaches to Economic Problems. Advances in Computational Economics, vol 6. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-2644-2_15
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DOI: https://doi.org/10.1007/978-1-4757-2644-2_15
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4419-4770-3
Online ISBN: 978-1-4757-2644-2
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