Where strategic and evolutionary stability depart - a study of minimal diversity games
Paper number: 10/01
Paper Category: Discussion Paper
Dieter Balkenborg, Stefano Demichelis and Dries Vermeulen
A minimal diversity game is an n player strategic form game in which each player has m pure strategies at his disposal. The payoff to each player is always 1, unless all players select the same pure strategy, in which case all players receive zero payoff. Such a game has a unique isolated completely mixed Nash equilibrium in which each player plays each strategy with equal probability, and a connected component of Nash equilibria consisting of those strategy profiles in which each player receives payoff 1. The Pareto superior component is shown to be asymptotically stable under a wide class of evolutionary dynamics, while the isolated equilibrium is not. On the other hand, the isolated equilibrium is strategically stable, while the strategic stability of the Pareto efficient component depends on the dimension of the component, and hence on the number of players, and the number of pure strategies.
JEL Codes. C72, D44.
Keywords. Strategic form games, strategic stability, evolutionary stability.