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Learning efficient Nash equilibra in distributed systems

with H. Peyton Young

An individual’s learning rule is completely uncoupled if it does not depend directly on the actions or payoffs of anyone else. We propose a variant of log linear learning that is completely uncoupled and that selects an efficient (welfare-maximizing) pure Nash equilibrium in all generic n-person games that possess at least one pure Nash equilibrium. In games that do not have such an equilibrium, there is a simple formula that expresses the long-run probability of the various disequilibrium states in terms of two factors: i) the sum of payoffs over all agents, and ii) the maximum payoff gain that results from a unilateral deviation by some agent. This welfare/stability trade-off criterion provides a novel framework for analyzing the selection of disequilibrium as well as equilibrium states in n-person games.