Learning, Local Interaction, and Coordination.

This paper discusses the dynamic implications of learning in a large population coordination game, focusing on the structure of the matching process that describes how players meet. As in M. Kandori, G. Mailath, and R. Rob (1992), experimentation and myopia create 'evolutionary' forces that lead players to coordinate on the risk dominant equilibrium. To describe play with finite time horizons, it is necessary to consider the rates at which the dynamic systems converge. In large populations with uniform matching, play is determined largely by historical factors. When players interact with small sets of neighbors, evolutionary forces may determine the outcome. Copyright 1993 by The Econometric Society.