Average testing and Pareto efficiency

Itai Arieli and Yakov Babichenko

Journal of Economic Theory, 2012, vol. 147, issue 6, 2376-2398

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 ε>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 3ε-Pareto efficient boundary.

Keywords: Pareto efficient boundary; Learning dynamic; Average testing (search for similar items in EconPapers)
JEL-codes: C73 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:147:y:2012:i:6:p:2376-2398

DOI: 10.1016/j.jet.2012.05.001

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