Overcoming Free-Riding in Bandit Games

Johannes H\"orner, Nicolas Klein and Sven Rady

Papers from arXiv.org

Abstract: This paper considers a class of experimentation games with L\'{e}vy bandits encompassing those of Bolton and Harris (1999) and Keller, Rady and Cripps (2005). 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 (MPE). This is not an artifact 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.

Date: 2019-10, Revised 2021-12
New Economics Papers: this item is included in nep-gth and nep-mic
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Overcoming Free-Riding in Bandit Games (2022)
Working Paper: Overcoming Free-Riding in Bandit Games (2022)
Working Paper: Overcoming Free-Riding in Bandit Games (2021)
Working Paper: Overcoming Free-Riding in Bandit Games (2020)
Working Paper: Overcoming Free-Riding in Bandit Games (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1910.08953

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