Genetic drift in tacit coordination games

Abstract

This paper investigates evolutionary adaptation in a coordination game with strategic uncertainty. The game is characterized by the multiplicity of Nash equilibria that can be ranked according to the payoff that players obtain. Two different equilibrium refinement concepts predict the selection of different equilibria. Evidence from the experiments with human subjects suggests that the equilibrium selection depends on the number of players that take part in the game and on the number of repetitions of the game. The results of simulations in which players use the genetic algorithm to update their strategies show that, regardless of the number of players that participate in the game, any equilibrium can be reached through the effects of mutation and genetic drift. The number of players has an impact on the time spent in each of the equilibria. In particular, the time spent in those equilibria that result in the higher payoffs is negatively related to the number of players.