The Efficiency of Adapting Aspiration Levels

Martin Posch, A. Pichler and K. Sigmund

Working Papers from International Institute for Applied Systems Analysis

Abstract: Win-stay, lose-shift strategies in repeated games are based on an aspiration level. Amove is repeated if and only if the outcome, in the previous round, was satisficing in the sense that the payoff was at least as high as the aspiration level. We investigate the conditions under which adaptive mechanisms acting on the aspiration level (selection, for instance, or learning) can lead to an efficient outcome; in other words, when can satisficing become optimising? Analytic results for 2 X 2-games are presented. They suggest that in a large variety of social interactions, self-centered rules (based uniquely on one's own payoff) cannot suffice.

Date: 1998-12
New Economics Papers: this item is included in nep-evo and nep-mic
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