Abstract:

We consider the class of 2×2 coordination games where one pure equilibrium is Pareto efficient and the other pure equilibrium is risk dominant. We study learning dynamics with a finite population of rational agents that take an action when they are born in order to maximize their discounted payoffs throughout their life span. The agents differ from one another by their death rate which is determined according to a stochastic process. We identify a number of novel conditions over the stochastic process for which the Pareto efficient equilibrium is both accessible and absorbing and thus uniquely selected.