IDEAS home Printed from https://ideas.repec.org/a/eee/phsmap/v389y2010i6p1230-1238.html
   My bibliography  Save this article

Constrained information minority game: How was the night at El Farol?

Author

Listed:
  • Lustosa, Bernardo C.
  • Cajueiro, Daniel O.

Abstract

We introduce a variation of the El Farol Game in which the only players who surely know the outcome of the last turn of the game are those who actually attended the bar. Other players may receive this information with reduced probability. This information can be transmitted by another player who actually attended the bar in the last turn of the game or from the media. We show that since this game is not organized around the socially optimal point, arbitrage opportunities may arise. Therefore, we study how these opportunities can be exploited by an agent. An interesting application of this model is the market of goods being auctioned, such as cars being repossessed. The results obtained here seem to closely reflect the dynamics of this market in Brazil.

Suggested Citation

  • Lustosa, Bernardo C. & Cajueiro, Daniel O., 2010. "Constrained information minority game: How was the night at El Farol?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(6), pages 1230-1238.
    • Handle: RePEc:eee:phsmap:v:389:y:2010:i:6:p:1230-1238
    DOI: 10.1016/j.physa.2009.11.034
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378437109009686
    Download Restriction: Full text for ScienceDirect subscribers only. Journal offers the option of making the article available online on Science direct for a fee of $3,000
    File URL: https://libkey.io/10.1016/j.physa.2009.11.034?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Challet, Damien & Marsili, M & Ottino, Gabriele, 2004. "Shedding light on El Farol," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 332(C), pages 469-482.
    2. A. Martino, 2003. "Dynamics of multi-frequency minority games," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 35(1), pages 143-152, September.
    3. Marsili, Matteo & Piai, Maurizio, 2002. "Colored minority games," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 310(1), pages 234-244.
    4. Burgos, E. & Ceva, Horacio & Perazzo, R.P.J., 2004. "The evolutionary minority game with local coordination," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 337(3), pages 635-644.
    5. Mello, Bernardo A. & Cajueiro, Daniel O., 2008. "Minority games, diversity, cooperativity and the concept of intelligence," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(2), pages 557-566.
    6. Arthur, W Brian, 1994. "Inductive Reasoning and Bounded Rationality," American Economic Review, American Economic Association, vol. 84(2), pages 406-411, May.
    7. Challet, Damien & Marsili, Matteo & Zhang, Yi-Cheng, 2000. "Modeling market mechanism with minority game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 276(1), pages 284-315.
    8. H. Lavička & F. Slanina, 2007. "Evolution of imitation networks in Minority Game model," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 56(1), pages 53-63, March.
    9. Sysi-Aho, Marko & Chakraborti, Anirban & Kaski, Kimmo, 2003. "Adaptation using hybridized genetic crossover strategies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 322(C), pages 701-709.
    10. Johnson, N.F & Hui, P.M & Zheng, Dafang & Tai, C.W, 1999. "Minority game with arbitrary cutoffs," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 269(2), pages 493-502.
    11. Ferreira, Fernando F. & de Oliveira, Viviane M. & Crepaldi, Antônio F. & Campos, Paulo R.A., 2005. "Agent-based model with heterogeneous fundamental prices," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 357(3), pages 534-542.
    12. Li, Yi & Savit, Robert, 2004. "Toward a theory of local resource competition: the minority game with private information," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 335(1), pages 217-239.
    13. Liu, Ching & Liaw, Sy-Sang, 2006. "Maximize personal gain in the minority game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 360(2), pages 516-524.
    14. Matteo Marsili & Maurizio Piai, 2002. "Colored minority games," Papers cond-mat/0202479, arXiv.org.
    15. Li, Yi & Riolo, Rick & Savit, Robert, 2000. "Evolution in minority games. (I). Games with a fixed strategy space," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 276(1), pages 234-264.
    16. Marsili, Matteo, 2001. "Market mechanism and expectations in minority and majority games," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 299(1), pages 93-103.
    17. Shang, Lihui & Wang, Xiao Fan, 2006. "A modified evolutionary minority game with local imitation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 361(2), pages 643-650.
    18. Andrea De Martino, 2003. "Dynamics of multi-frequency minority games," Papers cond-mat/0306507, arXiv.org.
    19. Yang, Wei-Song & Wang, Bing-Hong & Wu, Yi-Lin & Xie, Yan-Bo, 2004. "Searching good strategies in evolutionary minority game using variable length genetic algorithm," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 339(3), pages 583-590.
    20. Kalinowski, Thomas & Schulz, Hans-Jörg & Briese, Michael, 2000. "Cooperation in the Minority Game with local information," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 277(3), pages 502-508.
    21. Moelbert, S. & De Los Rios, P., 2002. "The local minority game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 303(1), pages 217-225.
    22. LeBaron, Blake, 2000. "Agent-based computational finance: Suggested readings and early research," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 679-702, June.
    23. Caridi, Inés & Ceva, Horacio, 2004. "The Minority Game with interactions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 339(3), pages 574-582.
    24. Slanina, František & Zhang, Yi-Cheng, 2001. "Dynamical spin-glass-like behavior in an evolutionary game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 289(1), pages 290-300.
    25. W. Brian Arthur, 1994. "Inductive Reasoning, Bounded Rationality and the Bar Problem," Working Papers 94-03-014, Santa Fe Institute.
    26. Kirley, Michael, 2006. "Evolutionary minority games with small-world interactions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 365(2), pages 521-528.
    27. Challet, D. & Zhang, Y.-C., 1997. "Emergence of cooperation and organization in an evolutionary game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 246(3), pages 407-418.
    28. Quan, Hong-Jun & Wang, Bing-Hong & Hui, P.M. & Luo, Xiao-Shu, 2003. "Self-segregation and enhanced cooperation in an evolving population through local information transmission," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 321(1), pages 300-308.
    29. Yip, K.F. & Hui, P.M. & Lo, T.S. & Johnson, N.F., 2003. "Efficient resource distribution in a minority game with a biased pool of strategies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 321(1), pages 318-324.
    30. A. De Martino & I. Giardina & M. Marsili & A. Tedeschi, 2004. "Generalized minority games with adaptive trend-followers and contrarians," Papers cond-mat/0403649, arXiv.org.
    31. Johnson, Neil F. & Jefferies, Paul & Hui, Pak Ming, 2003. "Financial Market Complexity," OUP Catalogue, Oxford University Press, number 9780198526650, Decembrie.
    32. Li, Yi & Riolo, Rick & Savit, Robert, 2000. "Evolution in minority games. (II). Games with variable strategy spaces," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 276(1), pages 265-283.
    33. Mosetti, Giancarlo & Challet, Damien & Zhang, Yi-Cheng, 2006. "Minority games with heterogeneous timescales," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 365(2), pages 529-542.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mello, Bernardo A. & Cajueiro, Daniel O., 2008. "Minority games, diversity, cooperativity and the concept of intelligence," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(2), pages 557-566.
    2. Xin-Jie Zhang & Yong Tang & Jason Xiong & Wei-Jia Wang & Yi-Cheng Zhang, 2018. "Dynamics of Cooperation in Minority Games in Alliance Networks," Sustainability, MDPI, vol. 10(12), pages 1-17, December.
    3. Linde, Jona & Sonnemans, Joep & Tuinstra, Jan, 2014. "Strategies and evolution in the minority game: A multi-round strategy experiment," Games and Economic Behavior, Elsevier, vol. 86(C), pages 77-95.
    4. Vee-Liem Saw & Lock Yue Chew, 2020. "No-boarding buses: Synchronisation for efficiency," PLOS ONE, Public Library of Science, vol. 15(3), pages 1-34, March.
    5. Shu-Heng Chen & Umberto Gostoli, 2017. "Coordination in the El Farol Bar problem: The role of social preferences and social networks," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(1), pages 59-93, April.
    6. Giorgio Fagiolo & Marco Valente, 2005. "Minority Games, Local Interactions, and Endogenous Networks," Computational Economics, Springer;Society for Computational Economics, vol. 25(1), pages 41-57, February.
    7. Ren, F. & Zhang, Y.C., 2008. "Trading model with pair pattern strategies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(22), pages 5523-5534.
    8. Challet, Damien, 2008. "Inter-pattern speculation: Beyond minority, majority and $-games," Journal of Economic Dynamics and Control, Elsevier, vol. 32(1), pages 85-100, January.
    9. Kirley, Michael, 2006. "Evolutionary minority games with small-world interactions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 365(2), pages 521-528.
    10. Linde, Jona & Gietl, Daniel & Sonnemans, Joep & Tuinstra, Jan, 2023. "The effect of quantity and quality of information in strategy tournaments," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 305-323.
    11. Adão, Luiz F.S. & Silveira, Douglas & Ely, Regis A. & Cajueiro, Daniel O., 2022. "The impacts of interest rates on banks’ loan portfolio risk-taking," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    12. Guglielmo Maria Caporale & Antoaneta Serguieva & Hao Wu, 2009. "Financial contagion: evolutionary optimization of a multinational agent‐based model," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 16(1‐2), pages 111-125, January.
    13. Yang, Cheng & Sun, Shixin, 2007. "The minority game with incomplete strategies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 379(2), pages 645-653.
    14. Cross, Rod & Grinfeld, Michael & Lamba, Harbir & Seaman, Tim, 2005. "A threshold model of investor psychology," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 354(C), pages 463-478.
    15. Andersen, Jørgen Vitting & de Peretti, Philippe, 2021. "Heuristics in experiments with infinitely large strategy spaces," Journal of Business Research, Elsevier, vol. 129(C), pages 612-620.
    16. Gu, Gao-Feng & Chen, Wei & Zhou, Wei-Xing, 2008. "Empirical regularities of order placement in the Chinese stock market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(13), pages 3173-3182.
    17. Alvarez-Ramirez, Jose & Suarez, Rodolfo & Ibarra-Valdez, Carlos, 2003. "Trading strategies, feedback control and market dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 220-226.
    18. Jørgen Vitting Andersen & Philippe de Peretti, 2020. "Heuristics in experiments with infinitely large strategy spaces," Post-Print hal-02435934, HAL.
    19. Lucas Fievet & Didier Sornette, 2018. "Calibrating emergent phenomena in stock markets with agent based models," PLOS ONE, Public Library of Science, vol. 13(3), pages 1-17, March.
    20. Laureti, Paolo & Ruch, Peter & Wakeling, Joseph & Zhang, Yi-Cheng, 2004. "The Interactive Minority Game: a Web-based investigation of human market interactions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 331(3), pages 651-659.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:phsmap:v:389:y:2010:i:6:p:1230-1238. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.