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Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits

  • Schlag, Karl H.

In consectutive rounds, each agent in a finite population chooses an action, is randomly matched, obtains a payoff and then observes the performance of another agent. An agent determines future behavior based on the information she receives from the present round. She chooses among the behavioral rules that increase expected payoffs in any specifications of the matching scenario. The rule that outperforms all other such rules specifies to imitate the action of an agent that performed better with probability proportional to how much better she performed. The evolution of a large population in which each agent uses this rule can be approximated in the short run by the replicator dynamics.

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

Volume (Year): 78 (1998)
Issue (Month): 1 (January)
Pages: 130-156

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Handle: RePEc:eee:jetheo:v:78:y:1998:i:1:p:130-156
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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