Advertisement

Learning from Average Experience

  • James Bergin
  • Dan Bernhardt
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 2690)

Abstract

We study repeated interaction over time and explore long-run behavior when individuals imitate successful past performers, selecting actions that yielded better average historical performance. For a class of environments (such as the oligopoly environment) it is known that such behavior results in very inefficient outcomes. Increasing ones own payoff comes partly at the expense of others and the dynamics generated by imitative behavior lead to low welfare in the long run. We show that this conclusion rests on the assumption that individuals have short memories. The situation differs sharply if agents have longer memories and evaluate actions according to average performance. In that case, it turns out that highly cooperative or collusive arise. In particular, with sufficiently long memory the unique stochastically stable outcome is the maximally collusive outcome.

Keywords

Short Memory Imitative Behavior Symmetric Nash Equilibrium Longe Memory Collusive Outcome 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    Bergin, J., Bernhardt, D.: Imitative Learning. mimeo, Queen’s University (2002)Google Scholar
  2. 2.
    Kandori, M., Mailath, G., Rob, R.: Learning, Mutations and Long-Run Equilibria in Games. Econometrica 61, 29–56 (1993)zbMATHCrossRefMathSciNetGoogle Scholar
  3. 3.
    Vega-Redondo, F.: The Evolution of Walrasian Behavior. Econometrica 65, 375–384 (1997)zbMATHCrossRefGoogle Scholar
  4. 4.
    Young, P.: The Evolution of Conventions. Econometrica 61, 57–84 (1993)zbMATHCrossRefMathSciNetGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2003

Authors and Affiliations

  • James Bergin
    • 1
  • Dan Bernhardt
    • 2
  1. 1.Department of EconomicsQueen’s UniversityKingstonCANADA
  2. 2.Department of EconomicsUniversity of IllinoisChampaignUSA

Personalised recommendations