The imitation equilibrium concept is motivated by the experimental literature which suggests that under appropriate conditions imitation of the most successful relevant other is an important behavioral force. The concept may be useful for the evaluation of experimental data and for planning of future experiments. Recently there has been much theoretical and experimental work on learning in games. However, learning usually means learning about the strategic behavior of opponents rather than learning about the game as such. We propose a new concept, evolutionary robustness, which is stronger than the previous concepts.
Evolutionary robustness ensures dynamic stability for replicator dynamics in doubly symmetric games.
Without any knowledge of the payoff functions players increase, respectively decrease, their quantity by one unit as long as this leads to higher profits. We show that despite the absence of any coordination or punishing device this process converges to a collusive outcome. We report results of a series of experiments designed to test the stability of the best reply process. With linear demand and cost functions, the process is stable if and only if there are less than three firms in the market. However, we find no experimental evidence of such instability in a four firm oligopoly.