Linde Institute/Social and Information Sciences Laboratory (SISL) Seminar
Average Testing and Pareto Efficiency
We propose a simple adaptive procedure for playing strategic games: average testing. In this procedure each player sticks to her current strategy if it yields a payoff that exceeds her average payoff by at least some fixed Ɛ>0; otherwise she chooses a strategy at random. We consider generic two-person games where both players play according to the average testing procedure on blocks of k-periods. We demonstrate that for all k large enough, the pair of time-average payoffs converges (almost surely) to the 3Ɛ-Pareto efficient boundary.
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