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http://hdl.handle.net/10419/43752
2016-11-27T09:58:01ZThe El Farol problem revisited
http://hdl.handle.net/10419/111064
Title: The El Farol problem revisited
Authors: Böhm, Volker
Abstract: The so-called El Farol problem describes a prototypical situation of interacting agents making binary choices to participate in a non-cooperative environment or to stay by themselves and choosing an outside option. In a much cited paper Arthur (1994) argues that persistent on-converging sequences of rates of participation with permanent forecasting errors occur due to the non-existence of a prediction model for agents to forecast the attendance appropriately to induce stable rational expectations solutions. From this he concludes the need for agents to use boundedly rational rules. This note shows that in a large class of such models the failure of agents to find rational prediction rules which stabilize is not due to a non-existence of perfect rules, but rather to the failure of agents to identify the correct class of predictors from which the perfect ones can be chosen. What appears as a need to search for boundedly rational predictors originates from the non existence of stable confirming self-referential orbits induced by predictors selected from the wrong class. Specifically, it is shown that, within a specified class of the model and due to a structural non-convexity (or discontinuity), symmetric Nash equilibria of the associated static game may fail to exist generically depending on the utility level of the outside option. If they exist, they may induce the least desired outcome while, generically, asymmetric equilibria are uniquely determined by a positive maximal rate of attendance. The sequential setting turns the static game into a dynamic economic law of the Cobweb type for which there always exist nontrivial ϵ-perfect predictors implementing ϵ-perfect steady states as stable outcomes. If zero participation is a Nash equilibrium of the game there exists a unique perfect predictor implementing the trivial equilibrium as a stable steady state. In general, Nash equilibria of the one-shot game are among the ϵ-perfect foresight steady states of the dynamic model. If agents randomize over indifferent decisions the induced random Cobweb law together with recursive predictors becomes an iterated function system (IFS). There exist unbiased predictors with associated stable stationary solutions for appropriate randomizations supporting nonzero asymmetric equilibria which are not mixed Nash equilibria of the one-shot game. However, the least desired outcome remains as the unique stable stationary outcome for ϵ = 0 if it is a Nash equilibrium of the static game.2015-01-01T00:00:00ZDoes time pressure impair performance? An experiment on queueing behavior
http://hdl.handle.net/10419/111066
Title: Does time pressure impair performance? An experiment on queueing behavior
Authors: Conte, Anna; Scarsini, Marco; Sürücü, Oktay
Abstract: We experimentally explore the effects of time pressure on decision making. Under different time allowance conditions, subjects are presented with a queueing situation and asked to join one of two queues that differ in length, server speed, and entry fee. The results can be grouped under two main categories. The first one concerns the factors driving customers' decisions in a queueing system. Only a proportion of subjects behave rationally and use the relevant information effciently. The rest of the subjects seem to adopt a rule of thumb that ignores the information on server speed and follows the shorter queue. The second category is related to the effects of time pressure on decision performance. A significant proportion of the population is not affected by time limitations and shows a consistent behavior throughout the treatments. On the other hand, the majority of subjects' performance is impaired by time limitations. More importantly, this impairment is not due to the stringency of the limitation but mainly due to the fact that being exposed to a time limitation, even to a loose one, brings along stress and panic, and causes subjects to use time inefficiently.2015-01-01T00:00:00ZNetwork design and imperfect defense
http://hdl.handle.net/10419/111067
Title: Network design and imperfect defense
Authors: Landwehr, Jakob
Abstract: The question of how to optimally design an infrastructure network that may be subject to intelligent threats is of highest interest. We address this problem by considering a Designer-Adversary game of optimal network design for the case of imperfect node defense. In this two-stage game, first the Designer defends network connectivity by forming costly links and additionally protecting nodes. Then, the Adversary attacks a fixed number of nodes, aiming to disconnect the network. In contrast to the existing literature, defense is imperfect in the sense that defended nodes can still be destroyed with some fixed probability. We completely characterize the solution of the game for attack budgets of one and two nodes, while for larger budget we present a partial characterization of the solution. To do so, we determine the minimum number of links necessary to construct a network with any degree of connectivity and any given number of essential nodes.2015-01-01T00:00:00ZDynamic consistent alpha-maxim expected utility
http://hdl.handle.net/10419/111070
Title: Dynamic consistent alpha-maxim expected utility
Authors: Beißner, Patrick; Lin, Qian
Abstract: We establish a class of fully nonlinear conditional expectations. Similarly to the usage of linear expectations when a probabilistic description of uncertainty is present, we observe analogue quantitative and qualitative properties. The type of nonlinearity captures the agents sentiments of optimism and pessimism in an ambiguous environment. We then introduce an expected utility under a nonlinear expectation, and show monotonicity and continuity of utility. Risk aversion is characterized, and the properties of the certainty equivalent are discussed. Finally, we derive an Arrow-Pratt approximation of the static certainty equivalent and investigate the dynamic version via recursive equations.2015-01-01T00:00:00Z