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Better-Reply Dynamics with Bounded Recall

Author

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  • Andriy Zapechelnyuk

    (Kyiv School of Economics)

Abstract

A decision maker is engaged in a repeated interaction with Nature. The objective of the decision maker is to guarantee to himself the average payoff as large as the best-reply payoff to Nature's empirical distribution of play, no matter what Nature does. The decision maker with perfect recall can achieve this objective by a simple better-reply strategy. In this paper we demonstrate that the relationship between perfect recall and bounded recall is not straightforward: The decision maker with bounded recall may fail to achieve this objective, no matter how long recall he has and no matter what better-reply strategy he employs.

Suggested Citation

  • Andriy Zapechelnyuk, 2008. "Better-Reply Dynamics with Bounded Recall," Discussion Papers 2, Kyiv School of Economics, revised Mar 2008.
    • Handle: RePEc:kse:dpaper:2
    Note: Published in Mathematics of Operations Research, 33, 869-879 (2008)
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    File URL: http://repec.kse.org.ua/pdf/KSE_dp2.pdf
    File Function: Revised version, March 2008
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    References listed on IDEAS

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    1. Sergiu Hart & Andreu Mas-Colell, 2013. "A General Class Of Adaptive Strategies," World Scientific Book Chapters, in: Simple Adaptive Strategies From Regret-Matching to Uncoupled Dynamics, chapter 3, pages 47-76, World Scientific Publishing Co. Pte. Ltd..
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    6. Fudenberg, Drew & Levine, David K., 1995. "Consistency and cautious fictitious play," Journal of Economic Dynamics and Control, Elsevier, vol. 19(5-7), pages 1065-1089.
    7. Sergiu Hart & Andreu Mas-Colell, 2013. "A Simple Adaptive Procedure Leading To Correlated Equilibrium," World Scientific Book Chapters, in: Simple Adaptive Strategies From Regret-Matching to Uncoupled Dynamics, chapter 2, pages 17-46, World Scientific Publishing Co. Pte. Ltd..
    8. Neyman, Abraham & Okada, Daijiro, 2000. "Repeated Games with Bounded Entropy," Games and Economic Behavior, Elsevier, vol. 30(2), pages 228-247, February.
    9. Ben-Porath Elchanan, 1993. "Repeated Games with Finite Automata," Journal of Economic Theory, Elsevier, vol. 59(1), pages 17-32, February.
    10. Watson Joel, 1994. "Cooperation in the Infinitely Repeated Prisoners' Dilemma with Perturbations," Games and Economic Behavior, Elsevier, vol. 7(2), pages 260-285, September.
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    Cited by:

    1. Schlag, Karl H. & Zapechelnyuk, Andriy, 2017. "Dynamic benchmark targeting," Journal of Economic Theory, Elsevier, vol. 169(C), pages 145-169.
    2. Rene Saran & Roberto Serrano, 2012. "Regret Matching with Finite Memory," Dynamic Games and Applications, Springer, vol. 2(1), pages 160-175, March.

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    More about this item

    Keywords

    Better-reply dynamics; regret; bounded recall; fictitious play; approachability;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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