Eur. Phys. J. B 67, 357-367 (2009)
https://doi.org/10.1140/epjb/e2009-00037-3

Illusory versus genuine control in agent-based games

Dept. of Management, Technology and Economics, ETH Zurich, 8032 Zurich, Switzerland

Corresponding authors: ^a jsatinover@ethz.ch - ^b dsornette@ethz.ch

Received: 29 February 2008
Revised: 22 September 2008
Published online: 10 February 2009

Abstract

In the Minority, Majority and Dollar Games (MG, MAJG, $G) agents compete for rewards, acting in accord with the previously best-performing of their strategies. Different aspects/kinds of real-world markets are modelled by these games. In the MG, agents compete for scarce resources; in the MAJG agents imitate the group to exploit a trend; in the $G agents attempt to predict and benefit both from trends and changes in the direction of a market. It has been previously shown that in the MG for a reasonable number of preliminary time steps preceding equilibrium (Time Horizon MG, THMG), agents' attempt to optimize their gains by active strategy selection is “illusory”: the hypothetical gains of their strategies is greater on average than agents' actual average gains. Furthermore, if a small proportion of agents deliberately choose and act in accord with their seemingly worst performing strategy, these outperform all other agents on average, and even attain mean positive gain, otherwise rare for agents in the MG. This latter phenomenon raises the question as to how well the optimization procedure works in the THMAJG and TH$G. We demonstrate that the illusion of control is absent in THMAJG and TH$G. This provides further clarification of the kinds of situations subject to genuine control, and those not, in set-ups a priori defined to emphasize the importance of optimization.