Entropic Risk-Sensitive Evolutionary Learning and Equilibrium Selection in Coordination Games

Cooperative equilibria are fragile. When agents learn alongside each other rather than in a fixed environment, the process of learning destabilizes the cooperation they are trying to sustain: every gradient step an agent takes shifts the distribution of actions its partner will play, turning a cooperative partner into a source of stochastic noise precisely where the cooperation decision is most sensitive. We study how this co-learning noise propagates through the structure of coordination games, and find that the cooperative equilibrium, even when strongly Pareto-dominant, is exponentially unstable under standard risk-neutral learning, collapsing irreversibly once partner noise crosses the game's critical cooperation threshold. The natural response to apply distributional robustness to hedge against partner uncertainty makes things strictly worse: risk-averse return objectives penalize the high-variance cooperative action relative to defection, widening the instability region rather than shrinking it, a paradox that reveals a fundamental mismatch between the domains where robustness is applied and instability originates. We resolve this by showing that robustness should target the policy gradient update variance induced by partner uncertainty, not the return distribution. This distinction yields an algorithm whose gradient updates are modulated by an online measure of partner unpredictability, provably expanding the cooperation basin in symmetric coordination games. To unify stability, sample complexity, and welfare consequences of this approach, we introduce the Price of Paranoia as the structural dual of the Price of Anarchy. Together with a novel Cooperation Window, it precisely characterizes how much welfare learning algorithms can recover under partner noise, pinning down the optimal degree of robustness as a closed-form balance between equilibrium stability and sample efficiency.

We present a new solution concept called evolutionarily stable Stackelberg equilibrium (SESS). We study the Stackelberg evolutionary game setting in which there is a single leading player and a symmetric population of followers. The leader selects an optimal mixed strategy, anticipating that the follower population plays an evolutionarily stable strategy (ESS) in the induced subgame and may satisfy additional ecological conditions. We consider both leader-optimal and leader-pessimal selection among ESSs, which arise as special cases of our framework. Prior approaches to Stackelberg evolutionary games either define the follower response via evolutionary dynamics or assume rational best-response behavior, without explicitly enforcing stability against invasion by mutations. We present algorithms for computing SESS in discrete and continuous games, and validate the latter empirically. Our model applies naturally to biological settings; for example, in cancer treatment the leader represents the physician and the followers correspond to competing cancer cell phenotypes.

We extend the study of learning in games to dynamics that exhibit non-asymptotic stability. We do so through the notion of uniform stability, which is concerned with equilibria of individually utility-seeking dynamics. Perhaps surprisingly, it turns out to be closely connected to economic properties of collective rationality. Up to strategic equivalence, if a mixed equilibrium is uniformly stable, then it is weakly Pareto optimal; there is no way for all players to improve by jointly deviating from the equilibrium. This is a form of collective rationality that rules out the types of behaviors in the prisoner's dilemma or the tragedy of the commons. Moreover, we show that uniform stability determines the last-iterate convergence behavior for the family of incremental smoothed best-response dynamics, used to model individual and corporate behaviors in the markets. Unlike dynamics around strict equilibria, which can stabilize to socially-inefficient solutions, individually utility-seeking behaviors near mixed Nash equilibria lead to collective rationality.