Better-Reply Strategies with Bounded Recall

Andriy Zapechelnyuk ()
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Andriy Zapechelnyuk: the Hebrew University

Chapter 19 in Artificial Markets Modeling, 2007, pp 259-277 from Springer

Abstract: Abstract In every (discrete) period of time a decision maker (for short, an agent) makes a decision and, simultaneously, Nature selects a state of the world. The agent receives a payoff which depends on both his action and the state. Nature’s behavior is ex-ante unknown to the agent, it may be as simple as an i.i.d. environment or as sophisticated as a strategic play of a rational player. The agent’s objective is to select a sequence of decisions which guarantees to him the long-run average payoff as large as the best-reply payoff against Nature’s empirical distribution of play, no matter what Nature does. A behavior rule of the agent which fulfills this objective is called universally consistent1: the rule is “consistent” if it is optimized against the empirical play of Nature; the word “ universally” refers to its applicability to any behavior of Nature.

Date: 2007
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DOI: 10.1007/978-3-540-73135-1_19

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