1,185 research outputs found
Congestion, equilibrium and learning: The minority game
The minority game is a simple congestion game in which the players' main goal
is to choose among two options the one that is adopted by the smallest number
of players. We characterize the set of Nash equilibria and the limiting
behavior of several well-known learning processes in the minority game with an
arbitrary odd number of players. Interestingly, different learning processes
provide considerably different predictions
Dynamic Sender-Receiver Games
We consider a dynamic version of sender-receiver games, where the sequence of
states follows an irreducible Markov chain observed by the sender. Under mild
assumptions, we provide a simple characterization of the limit set of
equilibrium payoffs, as players become very patient. Under these assumptions,
the limit set depends on the Markov chain only through its invariant measure.
The (limit) equilibrium payoffs are the feasible payoffs that satisfy an
individual rationality condition for the receiver, and an incentive
compatibility condition for the sender
Should I remember more than you? - On the best response to factor-based strategies -
In this paper we offer a new approach to modeling strategies of bounded complexity, the so-called factor-based strategies. In our model, the strategy of a player in the multi-stage game does not directly map the set of histories to the set of her actions. Instead, the player's perception of is represented by a factor : -> where reflects the "cognitive complexity" of the player. Formally, mapping sends each history to an element of a factor space that represents its equivalence class. The play of the player can then be conditioned just on the elements of the set From the perspective of the original multi-stage game we say that a function from o is a factor of a strategy if there exists a function from to the set of actions of the player such that = In this case we say that the strategy is -factor-asedStationary strategies and strategies played by finite automata and strategies with bounded recall are the most prominent examples of factor-based strategies. In the discounted infinitely repeated game with perfect monitoring, a best reply to a profile of -factor-base strategies need not be a -factor-base strategy. However, if the factor is recursive, namely its value (1 , . . . , ) on a finite string of action profiles ( , . . . , ) is a function of (1 , . . . , - ) and , then for every profile of factor-based strategies there is a best reply that is a pure factor-based strategy. We also study factor-based strategies in the more general case of stochastic games.Bounded rationality, factor-based strategies, bounded recall strategies, finite automata
Imitators and Optimizers in Cournot Oligopoly
We analyze a symmetric n-firm Cournot oligopoly with a heterogeneous population of optimizers and imitators. Imitators mimic the output decision of the most successful firms of the previous round a l`a Vega-Redondo (1997). Optimizers play a myopic best response to the opponents’ previous output. Firms are allowed to make mistakes and deviate from the decision rules with a small probability. Applying stochastic stability analysis, we find that the long run distribution converges to a recurrent set of states in which imitators are better off than are optimizers. This finding appears to be robust even when optimizers are more sophisticated. It suggests that imitators drive optimizers out of the market contradicting a fundamental conjecture by Friedman (1953)
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