We present a dynamical theory of a multi-agent market game, the so-called Minority Game (MG), based on crowds and anticrowds. The time-averaged version of the dynamical equations provides a quantitatively accurate, yet intuitively simple, explanation for the variation of the standard deviation ('volatility') in MG-like games. We demonstrate this for the basic MG, and the MG with stochastic strategies. The time-dependent equations themselves reproduce the essential dynamics of the MG.
- 01.75.+m Science and societ
- 02.50.Le Decision theory and game theory
- 05.40.-a Fluctuation phenomena, random processes, noise, and Brownian motion
- 87.23.Ge Dynamics of social systems
ASJC Scopus subject areas
- Electronic, Optical and Magnetic Materials
- Condensed Matter Physics