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The Efficiency of Adapting Aspiration Levels

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  • M. Posch
  • A. Pichler
  • K. Sigmund

Abstract

Win-stay, lose-shift strategies in repeated games are based on an aspiration level. Amove is repeated if and only if the outcome, in the previous round, was satisficing in the sense that the payoff was at least as high as the aspiration level. We investigate the conditions under which adaptive mechanisms acting on the aspiration level (selection, for instance, or learning) can lead to an efficient outcome; in other words, when can satisficing become optimising? Analytic results for 2 X 2-games are presented. They suggest that in a large variety of social interactions, self-centered rules (based uniquely on one's own payoff) cannot suffice.

Suggested Citation

  • M. Posch & A. Pichler & K. Sigmund, 1998. "The Efficiency of Adapting Aspiration Levels," Working Papers ir98103, International Institute for Applied Systems Analysis.
    • Handle: RePEc:wop:iasawp:ir98103
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    References listed on IDEAS

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    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, April.
    2. Martin Posch, 1997. "Cycling in a stochastic learning algorithm for normal form games," Journal of Evolutionary Economics, Springer, vol. 7(2), pages 193-207.
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    Cited by:

    1. Anton M Unakafov & Thomas Schultze & Alexander Gail & Sebastian Moeller & Igor Kagan & Stephan Eule & Fred Wolf, 2020. "Emergence and suppression of cooperation by action visibility in transparent games," PLOS Computational Biology, Public Library of Science, vol. 16(1), pages 1-32, January.
    2. Cui Zhiwei & Zhai Jian & Liu Xuan, 2009. "The Efficiency of Observability and Mutual Linkage," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-36, July.
    3. Tanimoto, Jun, 2010. "The effect of assortativity by degree on emerging cooperation in a 2×2 dilemma game played on an evolutionary network," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(16), pages 3325-3335.
    4. Knudsen, Thorbjørn, 2008. "Reference groups and variable risk strategies," Journal of Economic Behavior & Organization, Elsevier, vol. 66(1), pages 22-36, April.
    5. Steffen Huck & Kai A. Konrad & Wieland Müller & Hans-Theo Normann, 2007. "The Merger Paradox and why Aspiration Levels Let it Fail in the Laboratory," Economic Journal, Royal Economic Society, vol. 117(522), pages 1073-1095, July.
    6. Oechssler, Jorg, 2002. "Cooperation as a result of learning with aspiration levels," Journal of Economic Behavior & Organization, Elsevier, vol. 49(3), pages 405-409, November.
    7. Walter Gutjahr, 2006. "Interaction dynamics of two reinforcement learners," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 14(1), pages 59-86, February.
    8. Cho, In-Koo & Matsui, Akihiko, 2005. "Learning aspiration in repeated games," Journal of Economic Theory, Elsevier, vol. 124(2), pages 171-201, October.
    9. Marco Novarese & Salvatore Rizzello, 2003. "Satisfaction and Learning: an experimental game to measure happiness," Microeconomics 0306004, University Library of Munich, Germany.

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