How can intelligent agents in strategic interaction achieve equilibrium? This equilibration question lies at the conceptual foundations of game theory. Orthodox opinion since the early 1960's has been that agents are rational and can be presumed to have sufficient endowments of common knowledge and sufficient computational ability to reach a Nash Equilibrium directly. In the last few years support for this orthodox view has begun to unravel, due in part to the inability of game theorists to find compelling Nash Equilibrium selection procedures. Many leading game theorists now believe that the equilibration question is best thought of in terms of an evolutionary process. This project represents a first empirical look at the new evolutionary approaches to the equilibration question. The empirical work will help identify those aspects of evolutionary game theory which do in fact show promise for positive economics. This is an empirical study of the process by which Nash equilibrium (or other coherent behavior) may be achieved by intelligent self-interested agents in strategic interactions. Building on recent theoretical extensions of the biologists' evolutionary games, this project presents populations of 6-24 undergraduate subjects with chosen payoff (or fitness) functions which embody interesting sorts of strategic interactions. Each subject faces a given payoff function and interacts anonymously with a fixed population of other subjects over 10 to 100 decision periods. In each period each subject enters his choice at a visually isolated computer terminal after viewing a computer display of the population distribution by all subjects in previous periods. The actual time paths of population distributions are compared to various theoretical time paths proposed by biologists and economists. In particular, the project looks for convergence to Nash equilibrium and to refinements of Nash equilibrium. The results should add significantly to the empirical basis of modern game theory, with eventual applications in diverse fields such as industrial organization and international economic policy.
