Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Hierarchic Process and Relevance of Dominated Strategies in the Long Run

Vol.25, No.4, December , 58–70



  •   (Department of Economics, Kookmin University)

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Abstract  

Kim and Wong (2010) re-examine the robustness of the KMR process (Kandori, Mailath, and Rob 1993) showing that any strict Nash equilibrium for the base game can be selected as a unique long run equilibrium under the KMR process by adding a totally dominated strategy. In response to this negative result, we introduce a state dependent mutational process called the hierarchic process and show that the stochastic long run equilibria of such a process are generically robust with respect to adding or eliminating totally dominated strategies. However the proposed mutational process is not enough to justify eliminating strictly but not necessarily totally dominated strategies.


Keywords
   Dominated Strategies, Hierarchic Process, Long Run Equilibrium

JEL classification codes
   C72, C73
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