Evolutionary minority games with memory

Gian Italo Bischi and Ugo Merlone

Journal of Evolutionary Economics, 2017, vol. 27, issue 5, No 3, 859-875

Abstract: Abstract We propose a simple dynamic adjustment mechanism, equivalent to the standard replicator dynamics in discrete time, to study the time evolution of a population of players facing a binary choice game, and apply this mechanism to minority games in order to investigate the effects of memory on the stability of the unique Nash equilibrium. Two different kinds of memory are considered, one where the players take into account the current and the previous payoffs in order to decide the strategy chosen in the next period, and the other one where the players consider the whole series of payoffs observed in the past through a discounted sum with exponentially fading weights. Both the memory representations proposed lead to an analytically tractable two-dimensional dynamical system, so that analytical results can be given for the stability of the Nash equilibrium. However, a global analysis of the models – performed by numerical methods and guided by the analytical results – shows that some complexities arise for intermediate values of the memory parameter, even if the stabilization effect of uniform memory is stated in both cases.

Keywords: Binary games; Minority games; Replicator dynamics; Memory; Stability (search for similar items in EconPapers)
JEL-codes: C72 C73 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s00191-017-0526-4

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