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Win Stay---Lose Shift: An Elementary Learning Rule for Normal Form Games

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  • Martin Posch

Abstract

In this paper we study a simple learning paradigm for iterated normal form games in an evolutionary context. Following the decision theoretic concept of satisficing we design players with a certain aspiration level. If their payoff is below this level, they change their current action, otherwise they repeat it. We consider stochastic generalizations of this win stay---lose shift principle that average the received payoff over several rounds of the game before comparing it to their aspiration level and allow the strategies to adapt their aspiration level in the course of the play. Our analysis is twofold. On the one hand we study the evolution of such strategies for the Prisoner's Dilemma; on the other hand we consider contexts where a randomly selected game is assigned to the players. In the presence of such high uncertainty win stay---lose shift strategies turn out to be very successful. Using computer simulations we address questions as: what is a favorable aspiration level? How many rounds should one observe before updating the current action? What is the impact of noise?

Suggested Citation

  • Martin Posch, 1997. "Win Stay---Lose Shift: An Elementary Learning Rule for Normal Form Games," Research in Economics 97-06-056e, Santa Fe Institute.
  • Handle: RePEc:wop:safire:97-06-056e
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    File URL: http://www.santafe.edu/sfi/publications/Working-Papers/97-06-056.ps
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    Cited by:

    1. Timothy Salmon, 2004. "Evidence for Learning to Learn Behavior in Normal Form Games," Theory and Decision, Springer, vol. 56(4), pages 367-404, April.

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