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Adaptive Learning and Emergent Coordination in Minority Games

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  • Giulio Bottazzi, Giovanna Devetag, Giovanni Dosi

Abstract

The work studies the properties of a coordination game in which agents repeatedly compete to be in the population minority. The game reflects some essential features of those economic situations in which positive rewards are assigned to individuals who behave in opposition to the modal behavior in a population. Here we model a group of heterogeneous agents who adaptively learn and we investigate the transient and long-run aggregate properties of the system in terms of both allocative and informational efficiency. Our results show that, first, the system long-run properties strongly depend on the behavioral learning rules adopted, and, second, adding noise at the individual decision level and hence increasing heterogeneity in the population substantially improve aggregate welfare, although at the expense of a longer adjustment phase. In fact, the system achieves in that way a higher level of efficiency compared to that attainable by perfectly rational and completely informed agents.

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Bibliographic Info

Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2001 with number 20.

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Date of creation: 01 Apr 2001
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Handle: RePEc:sce:scecf1:20

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Web page: http://www.econometricsociety.org/conference/SCE2001/SCE2001.html
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Keywords: minority game; coordination; speculation; adaptive learning; market efficiency; emergent properties;

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Cited by:
  1. Giorgio Fagiolo & Marco Valente, 2004. "Minority Games, Local Interactions, and Endogenous Networks," LEM Papers Series 2004/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  2. Willemien Kets, 2007. "The minority game: An economics perspective," Papers 0706.4432, arXiv.org.
  3. John Duffy, 2004. "Agent-Based Models and Human Subject Experiments," Computational Economics 0412001, EconWPA.

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