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Optimal strategies in collective Parrondo games

Author

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  • Luis Dinis

    (GISC and Dept. de Fisica Atomica, Molecular y Nuclear, Universidad Complutense de Madrid, Spain.)

  • Juan M. R. Parrondo

    (GISC and Dept. de Fisica Atomica, Molecular y Nuclear, Universidad Complutense de Madrid, Spain.)

Abstract

We present a modification of the so-called Parrondo's paradox where one is allowed to choose in each turn the game that a large number of individuals play. It turns out that, by choosing the game which gives the highest average earnings at each step, one ends up with systematic loses, whereas a periodic or random sequence of choices yields a steadily increase of the capital. An explanation of this behavior is given by noting that the short-range maximization of the returns is "killing the goose that laid the golden eggs". A continuous model displaying similar features is analyzed using dynamic programming techniques from control theory.

Suggested Citation

  • Luis Dinis & Juan M. R. Parrondo, 2002. "Optimal strategies in collective Parrondo games," Papers cond-mat/0212358, arXiv.org, revised Oct 2014.
    • Handle: RePEc:arx:papers:cond-mat/0212358
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