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Jumping to Conclusions

Microeconomics seminar

Add to calendar 2023-06-13 14:00 2023-06-13 15:15 Europe/Rome Jumping to Conclusions Seminar Room 3rd Floor Villa La Fonte YYYY-MM-DD


13 June 2023

14:00 - 15:15 CEST


Seminar Room 3rd Floor

Villa La Fonte

In this seminar, Sven Rady (University of Bonn), will present his paper "Jumping to Conclusions".

This talk presents a continuous-time game of strategic experimentation with two-armed bandits in which payoffs on the risky arm are generated by a compound Poisson process. The distribution of payoff increments depends on an unknown state of the world, whereas the arrival rate of such increments does not. As a consequence, players learn exclusively from the size of the lump-sum payoffs they obtain. Under perfect monitoring, the piecewise constancy of beliefs allows for an analysis of stationary Markov equilibria with essentially discrete-time techniques. In turn, these Markov equilibria constitute perfect Bayesian equilibria when players observe all payoffs, but not each other’s actions. Strongly symmetric equilibria cannot improve on the symmetric Markovian one. Whether asymmetric equilibria can achieve higher payoffs than Markovian equilibria is the focus of ongoing work.

Co-authors: Johannes Hörner (Yale University), Nicolas Klein (University Paris II), Sven Rady (University of Bonn)

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