Local Equilibria in Economic Games

Carlos Alós-Ferrer, University of Konstanz
Ana B. Ania, University of Vienna

Abstract

We study solution concepts for economic games that are resistant to local deviations. Strategy spaces are subsets of Rⁿ and local deviations are small in the Euclidean metric. We define local Nash equilibrium and local evolutionarily stable strategy, and present applications to Walrasian outcomes in Cournot games and separating outcomes in screening models.