The target projection dynamic

Games and Economic Behavior

(with Mark Voorneveld)

Journal publication / Working paper

Abstract.

We study the target projection dynamic, a model of learning in normal form games. The dynamic is given a microeconomic foundation in terms of myopic optimization under control costs due to a certain status-quo bias. We establish a number of desirable properties of the dynamic: existence, uniqueness and continuity of solution trajectories, Nash stationarity, positive correlation with payoffs, and innovation. Sufficient conditions are provided under which strictly dominated strategies are wiped out. Finally some stability results are provided for special classes of games.