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Coordination and self-organization in minority games: experimental evidence

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  • Giulio Bottazzi

    ()

  • Giovanna Devetag

    ()

Abstract

This work presents experimental results on a coordination game in which agents must repeatedly choose between two sides, and a positive fixed payoff is assigned only to agents who pick the minoritarian side. We conduct laboratory experiments in which stationary groups of five players play the game for 100 periods, and manipulate two treatment variables: the amount of `memory' M that players have regarding the game history (i.e., the length of the string of past outcomes that players can see on the screen while choosing), and the amount of information about other players' past choices. Our results show that, at the aggregate level a quite remarkable degree of coordination is achieved. Moreover providing players with full information about other players' choice distribution does not appear to improve efficiency significantly. At the individual level, a substantial portion of subjects exhibit 'inertial' behavior.

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Bibliographic Info

Paper provided by Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia in its series CEEL Working Papers with number 0215.

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Date of creation: 2002
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Handle: RePEc:trn:utwpce:0215

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Related research

Keywords: Experimental Economics; Expectations; Coordination; Asset pricing;

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References

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  1. Rami Zwick & Amnon Rapoport, 1999. "Tacit Coordination in a Decentralized Market Entry Game with Fixed Capacity," Experimental, EconWPA 9903001, EconWPA.
  2. Challet, Damien & Zhang, Yi-Cheng, 1998. "On the minority game: Analytical and numerical studies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 256(3), pages 514-532.
  3. Challet, D. & Zhang, Y.-C., 1997. "Emergence of cooperation and organization in an evolutionary game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 246(3), pages 407-418.
  4. Sundali, James A. & Rapoport, Amnon & Seale, Darryl A., 1995. "Coordination in Market Entry Games with Symmetric Players," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 64(2), pages 203-218, November.
  5. John B Van Huyck & Raymond C Battalio & Richard O Beil, 1997. "Tacit coordination games, strategic uncertainty, and coordination failure," Levine's Working Paper Archive 1225, David K. Levine.
  6. John Duffy & Ed Hopkins, 2004. "Learning, Information and Sorting in Market Entry Games: Theory and Evidence," ESE Discussion Papers 78, Edinburgh School of Economics, University of Edinburgh.
  7. 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.
  8. Arthur, W Brian, 1994. "Inductive Reasoning and Bounded Rationality," American Economic Review, American Economic Association, vol. 84(2), pages 406-11, May.
  9. Rapoport, Amnon & Boebel, Richard B., 1992. "Mixed strategies in strictly competitive games: A further test of the minimax hypothesis," Games and Economic Behavior, Elsevier, vol. 4(2), pages 261-283, April.
  10. Ochs, Jack, 1990. "The Coordination Problem in Decentralized Markets: An Experiment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(2), pages 545-59, May.
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Citations

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Cited by:
  1. Kets, W., 2007. "The Minority Game: An Economics Perspective," Discussion Paper, Tilburg University, Center for Economic Research 2007-53, Tilburg University, Center for Economic Research.
  2. Renault, Jérôme & Scarlatti, Sergio & Scarsini, Marco, 2008. "Discounted and finitely repeated minority games with public signals," Mathematical Social Sciences, Elsevier, Elsevier, vol. 56(1), pages 44-74, July.
  3. Paolo Laureti & Peter Ruch & Joseph Wakeling & Yi-Cheng Zhang, 2004. "The Interactive Minority Game: a Web based investigation of human market interactions," Experimental, EconWPA 0402004, EconWPA.

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