A folk theorem for minority games

Jérôme Renault, Sergio Scarlatti () and Marco Scarsini

ICER Working Papers - Applied Mathematics Series from ICER - International Centre for Economic Research

Abstract: We study a particular case of repeated games with public signals. In the stage game an odd number of players have to choose simultaneously one of two rooms. The players who choose the less crowded room receive a reward of one euro (whence the name “minority game”). Between the stages, only the current majority room is publicly announced. We show that in the infinitely repeated game any feasible payo can be achieved as a uniform equilibrium payo , and as an almost sure equilibrium payo . In particular we construct an inefficient equilibrium where, with probability one, all players choose the same room at almost all stages. This equilibrium is sustained by punishment phases which use, in a unusual way, the pure actions that were played before start of the punishment.

Keywords: Repeated games; imperfect monitoring; public signals (search for similar items in EconPapers)
Pages: 26 pages
Date: 2003-01
New Economics Papers: this item is included in nep-gth
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: A folk theorem for minority games (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:icr:wpmath:10-2003

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