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Average testing and Pareto efficiency

  • Arieli, Itai
  • Babichenko, Yakov
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    We propose a simple adaptive procedure for playing strategic games: average testing. In this procedure each player sticks to her current strategy if it yields a payoff that exceeds her average payoff by at least some fixed ε>0; otherwise she chooses a strategy at random. We consider generic two-person games where both players play according to the average testing procedure on blocks of k-periods. We demonstrate that for all k large enough, the pair of time-average payoffs converges (almost surely) to the 3ε-Pareto efficient boundary.

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    Article provided by Elsevier in its journal Journal of Economic Theory.

    Volume (Year): 147 (2012)
    Issue (Month): 6 ()
    Pages: 2376-2398

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    Handle: RePEc:eee:jetheo:v:147:y:2012:i:6:p:2376-2398
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    6. Foster, Dean P. & Young, H. Peyton, 2006. "Regret testing: learning to play Nash equilibrium without knowing you have an opponent," Theoretical Economics, Econometric Society, vol. 1(3), pages 341-367, September.
    7. Debraj Ray & Dilip Mookherjee & Fernando Vega Redondo & Rajeeva L. Karandikar, 1996. "Evolving aspirations and cooperation," Working Papers. Serie AD 1996-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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