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Adaptive Learning and Emergent Coordination in Minority Games

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Author Info

  • 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 Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 1999/24.

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Date of creation: 03 Dec 1999
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Handle: RePEc:ssa:lemwps:1999/24

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Keywords: minority game; speculation; adaptive learning; market efficiency; emergent properties;

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Cited by:
  1. Willemien Kets, 2007. "The minority game: An economics perspective," Papers 0706.4432, arXiv.org.
  2. Duffy, John, 2006. "Agent-Based Models and Human Subject Experiments," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 19, pages 949-1011 Elsevier.
  3. 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.
  4. Renault, Jérôme & Scarlatti, Sergio & Scarsini, Marco, 2008. "Discounted and finitely repeated minority games with public signals," Mathematical Social Sciences, Elsevier, vol. 56(1), pages 44-74, July.

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