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Heterogeneous Beliefs and Local Information in Stochastic Fictitious Play

  • Drew Fudenberg
  • Satoru Takahashi

Stochastic fictitious play (SFP) assumes that agents do not try to influence the future play of their current opponents, an assumption that is justified by appeal to a setting with a large population of players who are randomly matched to play the game. However, the dynamics of SFP have only been analyzed in models where all agents in a player role have the same beliefs. We analyze the dynamics of SFP in settings where there is a population of agents who observe only outcomes in their own matches and thus have heterogeneous beliefs. We provide conditions that ensure that the system converges to a state with homogeneous beliefs, and that its asymptotic behavior is the same as with a single representative agent in each player role.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 122247000000001695.

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Date of creation: 31 Dec 2008
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Handle: RePEc:cla:levarc:122247000000001695
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