Average Testing and the Efficient Boundary
AbstractWe propose a simple adaptive procedure for playing strategic games: average testing. In this procedure each player sticks to her current strategy if it yields a payoff that exceeds her average payoff by at least some fixed \epsilon > 0; otherwise she chooses a strategy at random. We consider generic two-person games where both players play according to the average testing procedure on blocks of k-periods. We demonstrate that for all k large enough, the pair of time-average payoffs converges (almost surely) to the 3\epsilon-Pareto efficient boundary.
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Bibliographic InfoPaper provided by The Center for the Study of Rationality, Hebrew University, Jerusalem in its series Discussion Paper Series with number dp567.
Length: 31 pages
Date of creation: Feb 2011
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-12 (All new papers)
- NEP-GTH-2011-03-12 (Game Theory)
- NEP-LAW-2011-03-12 (Law & Economics)
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- Pradelski, Bary S.R. & Young, H. Peyton, 2012. "Learning efficient Nash equilibria in distributed systems," Games and Economic Behavior, Elsevier, vol. 75(2), pages 882-897.
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