Satisficing Equilibrium

Abstract

In a $\textit{satisficing equilibrium}$ each agent plays one of their $k$ best pure actions, but not necessarily their best action. We show that satisficing equilibria in which agents play only their best or second-best action exist in almost all games. In fact, in almost all games, there exist satisficing equilibria in which all but one agent best-respond and the remaining agent plays at least a second-best action. By contrast, more than one third of games possess no pure Nash equilibrium. In addition to providing static foundations for satisficing equilibria, we show that a parsimonious dynamic converges to satisficing equilibria in almost all games. We apply our results to market design and show that a mediator who can control a single agent can enforce stability in most games. Finally, we use our results to study the existence of $\epsilon$-equilibria.