A Minority Game with Bounded Recall
Mathematics of Operations Research, Vol. 32, pp. 873-889, 2007
Posted: 12 Mar 2012
Date Written: 2007
Abstract
This paper studies a repeated minority game with public signals, symmetric bounded recall, and pure strategies. We investigate both public and private equilibria of the game with fixed recall size. We first show how public equilibria in such a repeated game can be represented as colored subgraphs of a de Bruijn graph. Then we prove that the set of public equilibrium payoffs with bounded recall converges to the set of uniform equilibrium payoffs as the size of the recall increases. We also show that private equilibria behave badly: A private equilibrium payoff with bounded recall need not be a uniform equilibrium payoff.
Keywords: folk theorem, de Bruijn sequence, imperfect monitoring, uniform equilibrium, public equilibrium, private equilibrium
JEL Classification: C72, C73
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