EconPapers    
Economics at your fingertips  
 

Overcoming Free-Riding in Bandit Games

Johannes Hörner, Nicolas Klein and Sven Rady

The Review of Economic Studies, 2022, vol. 89, issue 4, 1948-1992

Abstract: This article considers a class of experimentation games with Lévy bandits encompassing those of Bolton and Harris (1999, Econometrica, 67, 349–374) and Keller, Rady, and Cripps (2005, Econometrica, 73, 39–68). Its main result is that efficient (perfect Bayesian) equilibria exist whenever players’ payoffs have a diffusion component. Hence, the trade-offs emphasized in the literature do not rely on the intrinsic nature of bandit models but on the commonly adopted solution concept (Markov perfect equilibrium). This is not an artefact of continuous time: we prove that efficient equilibria arise as limits of equilibria in the discrete-time game. Furthermore, it suffices to relax the solution concept to strongly symmetric equilibrium.

Keywords: Two-armed bandit; Bayesian learning; Strategic experimentation; Strongly symmetric equilibrium; C73; D83 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1093/restud/rdab078 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Overcoming Free-Riding in Bandit Games (2022)
Working Paper: Overcoming Free-Riding in Bandit Games (2021) Downloads
Working Paper: Overcoming Free-Riding in Bandit Games (2021) Downloads
Working Paper: Overcoming Free-Riding in Bandit Games (2020) Downloads
Working Paper: Overcoming Free-Riding in Bandit Games (2019) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:89:y:2022:i:4:p:1948-1992.

Access Statistics for this article

The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

More articles in The Review of Economic Studies from Review of Economic Studies Ltd
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2025-03-19
Handle: RePEc:oup:restud:v:89:y:2022:i:4:p:1948-1992.