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Probability Matching and Reinforcement Learning

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  • Javier Rivas

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Abstract

Probability matching occurs when an action is chosen with a frequency equivalent to the probability of that action being the best choice. This sub-optimal behavior has been reported repeatedly by psychologist and experimental economist. We provide an evolutionary foundation for this phenomenon by showing that learning by reinforcement can lead to probability matching and, if learning occurs suffciently slowly, probability matching does not only occur in choice frequencies but also in choice probabilities. Our results are completed by proving that there exists no quasi-linear reinforcement learning specification such that behavior is optimal for all environments where counterfactuals are observed.

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Bibliographic Info

Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 11/20.

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Date of creation: Mar 2011
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Handle: RePEc:lec:leecon:11/20

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Keywords: Probability Matching; Reinforcement Learning;

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  1. Rubinstein, Ariel, 2002. "Irrational diversification in multiple decision problems," European Economic Review, Elsevier, vol. 46(8), pages 1369-1378, September.
  2. Borgers, Tilman & Sarin, Rajiv, 2000. "Naive Reinforcement Learning with Endogenous Aspirations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 921-50, November.
  3. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
  4. Kosfeld, Michael & Droste, Edward & Voorneveld, Mark, 2002. "A myopic adjustment process leading to best-reply matching," Games and Economic Behavior, Elsevier, vol. 40(2), pages 270-298, August.
  5. Javier Rivas, 2008. "Learning within a Markovian Environment," Economics Working Papers ECO2008/13, European University Institute.
  6. Samuelson Larry, 1994. "Stochastic Stability in Games with Alternative Best Replies," Journal of Economic Theory, Elsevier, vol. 64(1), pages 35-65, October.
  7. Colin Camerer & Teck-Hua Ho, 1999. "Experience-weighted Attraction Learning in Normal Form Games," Econometrica, Econometric Society, vol. 67(4), pages 827-874, July.
  8. Erev, Ido & Roth, Alvin E, 1998. "Predicting How People Play Games: Reinforcement Learning in Experimental Games with Unique, Mixed Strategy Equilibria," American Economic Review, American Economic Association, vol. 88(4), pages 848-81, September.
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