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Diversity of scales makes an advantage: The case of the Minority Game

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  • Miroslav Piv{s}tv{e}k
  • Frantisek Slanina

Abstract

We use the Minority Game as a testing frame for the problem of the emergence of diversity in socio-economic systems. For the MG with heterogeneous impacts, we show that the direct generalization of the usual agents' profit does not fit some real-world situations. As a typical example we use the traffic formulation of the MG. Taking into account vehicles of various lengths it can easily happen that one of the roads is crowded by a few long trucks and the other contains more drivers but still is less covered by vehicles. Most drivers are in the shorter queue, so the majority win. To describe such situations, we generalized the formula for agents' profit by explicitly introducing utility function depending on an agent's impact. Then, the overall profit of the system may become positive depending on the actual choice of the utility function. We investigated several choices of the utility function and showed that this variant of the MG may turn into a positive sum game.

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  • Miroslav Piv{s}tv{e}k & Frantisek Slanina, 2014. "Diversity of scales makes an advantage: The case of the Minority Game," Papers 1401.4331, arXiv.org.
    • Handle: RePEc:arx:papers:1401.4331
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    1. Mantegna,Rosario N. & Stanley,H. Eugene, 2007. "Introduction to Econophysics," Cambridge Books, Cambridge University Press, number 9780521039871, October.
    2. Bouchaud,Jean-Philippe & Potters,Marc, 2003. "Theory of Financial Risk and Derivative Pricing," Cambridge Books, Cambridge University Press, number 9780521819169, October.
    3. Johnson, Neil F. & Jefferies, Paul & Hui, Pak Ming, 2003. "Financial Market Complexity," OUP Catalogue, Oxford University Press, number 9780198526650.
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