Adaptive Learning and Emergent Coordination in Minority Games
AbstractThe 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 InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2001 with number 20.
Date of creation: 01 Apr 2001
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Web page: http://www.econometricsociety.org/conference/SCE2001/SCE2001.html
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minority game; coordination; speculation; adaptive learning; market efficiency; emergent properties;
Other versions of this item:
- Giulio Bottazzi & Giovanna Devetag & Giovanni Dosi, 1999. "Adaptive Learning and Emergent Coordination in Minority Games," LEM Papers Series 1999/24, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- G1 - Financial Economics - - General Financial Markets
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
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- 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.
- Giorgio Fagiolo & Marco Valente, 2005. "Minority Games, Local Interactions, and Endogenous Networks," Computational Economics, Society for Computational Economics, vol. 25(1), pages 41-57, February.
- Valente M. & Fagiolo G., 2004. "Minority Games, Local Interactions, and Endogenous Networks," Computing in Economics and Finance 2004 110, Society for Computational Economics.
- Willemien Kets, 2007.
"The minority game: An economics perspective,"
- John Duffy, 2004.
"Agent-Based Models and Human Subject Experiments,"
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