Fresh SI: Stochastic stability under logit choice in coalitional bargaining problems

In a recent paper published in Games and Economic Behavior, Ryoji Sawa considers the emergence of distributive norms in situations in which surplus is produced by coalitions of players.

Previous work (Newton, 2012 – discussed here) found that if strategy updating takes place under a coalitional dynamic with uniform probabilities of a “mistake” (a non-best response), then in the long run there is a tendency towards Rawlsian social choice – the emergence of social norms that maximize the wealth of the poorest members of society.

In contrast, Sawa uses the coalitional logit choice rule (Sawa, 2014 – discussed here) and finds the emergence of social norms that minimize the wealth of the richest members of society. This is similar to the finding of Agastya (1999, see link together with a general discussion of the Evolutionary Nash Program here). However, Agastya’s model used uniform mistakes in an individualistic dynamic. Therefore, two models that differ in these two aspects (perturbation structure and presence or absence of SI) lead to similar outcomes.

Read the full paper here.