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Abstract

We consider the situation in which individuals in a finite population must repeatedly choose an action yielding an uncertain payoff. Between choices, each individual may observe the performance of one other individual. We search for rules of behavior with limited memory that increase expected payoffs for any underlying payoff distribution. It is shown that the rule that outperforms all other rules with this property is the one that specifies imitation of the action of an individual that performed better with a probability proportional to how much better she performed. When each individual uses this best rule, the aggregate population behavior can be approximated by the replicator dynamic.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 78 (1998)
Issue (Month): 1 (January)
Pages: 130-156
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Handle: RePEc:eee:jetheo:v:78:y:1998:i:1:p:130-156

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Web page: http://www.elsevier.com/locate/inca/622869

For corrections or technical questions regarding this item, or to correct its listing, contact: (Jeroen Loos).

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Find related papers by JEL classification:

• C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
• C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other

References

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