Learning Dynamics Based on Social Comparisons

Economics

Speaker:Juan Block, University of Cambridge
Date: Wednesday 7 December 2016
Time: 13.30
Location: Streatham Court B

Further details

We study models of learning in games where agents with limited memory use social information to decide when and how to change their play. When agents only observe the aggregate distribution of payoffs and only recall information from the last period, we show that aggregate play comes close to Nash equilibrium behavior for (generic) games, and that pure equilibria are generally more stable than mixed equilibria. When agents observe not only the payoff distribution of other agents but also the actions that led to those payoffs, and can remember this for some time, the length of memory plays a key role. When agents’ memory is short, aggregate play may not come close to Nash equilibrium, but it does so if the game satisfies a acyclicity condition. When agents have sufficiently long memory their behavior comes close to Nash equilibrium for generic games. However, unlike in the model where social information is solely about how well other agents are doing, mixed equilibria can be favored over pure ones