Please use this identifier to cite or link to this item: http://hdl.handle.net/1783.1/3329

Effects of payoff functions and preference distributions in an adaptive population

Authors Yang, H. M.
Ting, Y. S.
Wong, K. Y. Michael
Issue Date 2008
Source PHYSICAL REVIEW E , v. 77, (3, Part 1), 2008, MAR
Summary Adaptive populations such as those in financial markets and distributed control can be modeled by the Minority Game. We consider how their dynamics depends on the agents' initial preferences of strategies, when the agents use linear or quadratic payoff functions to evaluate their strategies. We find that the fluctuations of the population making certain decisions ( the volatility ) depends on the diversity of the distribution of the initial preferences of strategies. When the diversity decreases, more agents tend to adapt their strategies together. In systems with linear payoffs, this results in dynamical transitions from vanishing volatility to a nonvanishing one. For low signal dimensions, the dynamical transitions for the different signals do not take place at the same critical diversity. Rather, a cascade of dynamical transitions takes place when the diversity is reduced. In contrast, no phase transitions are found in systems with the quadratic payoffs. Instead, a basin boundary of attraction separates two groups of samples in the space of the agents' decisions. Initial states inside this boundary converge to small volatility, while those outside diverge to a large one. Furthermore, when the preference distribution becomes more polarized, the dynamics becomes more erratic. All the above results are supported by good agreement between simulations and theory.
Subjects
ISSN 1539-3755
Rights Physical Review E © copyright (2008) American Physical Society. The Journal's web site is located at http://pre.aps.org/
Language English
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