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Constrained information minority game: How was the night at El Farol?

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  • Lustosa, Bernardo C.
  • Cajueiro, Daniel O.

Abstract

We introduce a variation of the El Farol Game in which the only players who surely know the outcome of the last turn of the game are those who actually attended the bar. Other players may receive this information with reduced probability. This information can be transmitted by another player who actually attended the bar in the last turn of the game or from the media. We show that since this game is not organized around the socially optimal point, arbitrage opportunities may arise. Therefore, we study how these opportunities can be exploited by an agent. An interesting application of this model is the market of goods being auctioned, such as cars being repossessed. The results obtained here seem to closely reflect the dynamics of this market in Brazil.

Suggested Citation

  • Lustosa, Bernardo C. & Cajueiro, Daniel O., 2010. "Constrained information minority game: How was the night at El Farol?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(6), pages 1230-1238.
    • Handle: RePEc:eee:phsmap:v:389:y:2010:i:6:p:1230-1238
    DOI: 10.1016/j.physa.2009.11.034
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