Optimal strategies in collective Parrondo games

Luis Dinis and Juan M. R. Parrondo
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Luis Dinis: GISC and Dept. de Fisica Atomica, Molecular y Nuclear, Universidad Complutense de Madrid, Spain.
Juan M. R. Parrondo: GISC and Dept. de Fisica Atomica, Molecular y Nuclear, Universidad Complutense de Madrid, Spain.

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Abstract: We present a modification of the so-called Parrondo's paradox where one is allowed to choose in each turn the game that a large number of individuals play. It turns out that, by choosing the game which gives the highest average earnings at each step, one ends up with systematic loses, whereas a periodic or random sequence of choices yields a steadily increase of the capital. An explanation of this behavior is given by noting that the short-range maximization of the returns is "killing the goose that laid the golden eggs". A continuous model displaying similar features is analyzed using dynamic programming techniques from control theory.

Date: 2002-12, Revised 2014-10
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Published in Europhys. Lett. 63 (3), 319 (2003)

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