“Illusion of control" in Time-Horizon Minority and Parrondo Games

Satinover, Jeffrey; Sornette, Didier

doi:10.1140/epjb/e2008-00112-3

Cited by 10 publications

(14 citation statements)

References 22 publications

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“…For example, it has been studied how random strategies of promotions can help to face the problems raised by the so-called Peter principle in hierarchical organizations [22][23][24] or how randomly selected legislators may improve the efficiency of a public institution like a Parliament [25]. Other groups have successfully explored the success of similar stochastic strategies also in minority and Parrondo games [26]. In this respect, it seems of particular interest the investigation of the role of random strategies in financial markets.…”

Section: Introductionmentioning

confidence: 99%

Micro and macro benefits of random investments in financial markets

Biondo

Pluchino

Rapisarda

2014

Contemporary Physics

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In this paper, making use of recent statistical physics techniques and models, we address the specific role of randomness in financial markets, both at the micro and the macro level. In particular, we review some recent results obtained about the effectiveness of random strategies of investment, compared with some of the most used trading strategies for forecasting the behavior of real financial indexes. We also push forward our analysis by means of a Self-Organized Criticality model, able to simulate financial avalanches in trading communities with different network topologies, where a Pareto-like power law behavior of wealth spontaneously emerges. In this context, we present new findings and suggestions for policies based on the effects that random strategies can have in terms of reduction of dangerous financial extreme events, i.e. bubbles and crashes.

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Section: Introductionmentioning

confidence: 99%

Micro and macro benefits of random investments in financial markets

Biondo

Pluchino

Rapisarda

2014

Contemporary Physics

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“…In addition, when the agents only remember the last T payoffs, the whole dynamics is Markovian of order T ; simple analytical formulations give many insights about the origin of large fluctuations [84,158].…”

Section: Reduced Set Of Strategiesmentioning

confidence: 99%

Statistical mechanics of competitive resource allocation using agent-based models

Chakraborti¹,

Challet²,

Chatterjee³

et al. 2015

Physics Reports

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“…Parrondo's paradox [12,13,14] is a counterintuitive behaviour that takes place in the context of game theory and represents one of the numerous examples of systems where noise and randomness can play a beneficial role [15,16,17,18,19,20,21,22]. In particular, Parrondo showed that two losing games can result in a winning trend when played in an alternating or in a random sequence by a single player.…”

Section: Parrondo's Paradox In Single and Collective Gamesmentioning

confidence: 99%

Selective altruism in collective games

Zappalà

Pluchino

Rapisarda

2014

Physica A: Statistical Mechanics and its Applications

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We study the emergence of altruistic behaviour in collective games. In particular, we take into account Toral's version of collective Parrondo's paradoxical games, in which the redistribution of capital between agents, who can play different strategies, creates a positive trend of increasing capital. In this framework, we insert two categories of players, altruistic and selfish ones, and see how they interact and how their capital evolves. More in detail, we analyse the positive effects of altruistic behaviour, but we also point out how selfish players take advantage of that situation. The general result is that altruistic behaviour is discouraged, because selfish players get richer while altruistic ones get poorer. We also consider a smarter way of being altruistic, based on reputation, called "selective altruism", which prevents selfish players from taking advantage of altruistic ones. In this new situation it is altruism, and not selfishness, to be encouraged and stabilized. Finally, we introduce a mechanism of imitation between players and study how it influences the composition of the population of both altruistic and selfish players as a function of time for different initial conditions and network topologies adopted.

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“Illusion of control" in Time-Horizon Minority and Parrondo Games

Cited by 10 publications

References 22 publications

Micro and macro benefits of random investments in financial markets

Micro and macro benefits of random investments in financial markets

Statistical mechanics of competitive resource allocation using agent-based models

Selective altruism in collective games

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