Doves and hawks in economics revisited. An evolutionary quantum game theory-based analysis of financial crises

TL;DR

This paper extends the classical Hawk-Dove game with quantum game theory to explore how entanglement influences the emergence of non-aggressive strategies, potentially preventing financial crises caused by aggressive market behaviors.

Contribution

It introduces a quantum approach to the Hawk-Dove game, revealing new stable strategies that promote non-aggressive behavior in financial markets, unlike classical predictions.

Findings

Quantum strategies can lead to stable non-aggressive behaviors.

Entanglement influences the emergence of new evolutionary stable strategies.

Quantum approach offers insights into preventing financial crises.

Abstract

The last financial and economic crisis demonstrated the dysfunctional long-term effects of aggressive behaviour in financial markets. Yet, evolutionary game theory predicts that under the condition of strategic dependence a certain degree of aggressive behaviour remains within a given population of agents. However, as the consequences of the financial crisis exhibit, it would be desirable to change the 'rules of the game' in a way that prevents the occurrence of any aggressive behaviour and thereby also the danger of market crashes. The paper picks up this aspect. Through the extension of the in literature well-known Hawk-Dove game by a quantum approach, we can show that dependent on entanglement, also evolutionary stable strategies can emerge, which are not predicted by classical evolutionary game theory and where the total economic population uses a non aggressive quantum strategy.