Adaptive learning in an asymmetric auction: genetic algorithm approach

Kirill Chernomaz ()

Journal of Economic Interaction and Coordination, 2014, vol. 9, issue 1, 27-51

Abstract: Agent-based simulations are performed to study adaptive learning in the context of asymmetric first-price auctions. Non-linearity of the Nash equilibrium strategies is used to investigate the effect of task complexity on adaptive learning by varying the degree of approximation the agents can handle. In addition, learning in different information environments is explored. Social learning allows agents to imitate each other’s bidding strategies based on their relative success. Under individual learning agents are limited to their own experience. We observe convergence to steady states near the predicted equilibrium in all cases. The ability to learn non-linear functions helps the agents with a non-linear equilibrium strategy but hurts the agents with an almost linear one. Better information about the opponent population has a relatively modest impact. A larger number of strategies to experiment with and an ability to systematically compare strategies by holding a number of factors constant have a comparatively stronger beneficial effect. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Agent-based simulations; Genetic algorithm; Learning; Asymmetric auctions; Nash equilibrium; C63; D44; D83 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s11403-013-0111-3

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