Average Testing and the Efficient Boundary

Itai Arieli and Yakov Babichenko

Discussion Paper Series from The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem

Abstract: We propose a simple adaptive procedure for playing strategic games: average testing. In this procedure each player sticks to her current strategy if it yields a payoff that exceeds her average payoff by at least some fixed \epsilon > 0; otherwise she chooses a strategy at random. We consider generic two-person games where both players play according to the average testing procedure on blocks of k-periods. We demonstrate that for all k large enough, the pair of time-average payoffs converges (almost surely) to the 3\epsilon-Pareto efficient boundary.

JEL-codes: K13 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2011-02
New Economics Papers: this item is included in nep-gth and nep-law
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Citations: View citations in EconPapers (5)

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