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965. A Promising Approach to the El Farol Bar Problem: Hysteresis in Decision Making
Invited abstract in session MC-43: Simulation in economics I, stream Agent-based Models in Management, Economic and Organisation Sciences.
Monday, 12:30-14:00Room: 99 (building: 306)
Authors (first author is the speaker)
| 1. | Burak Çetiner
|
| Industrial Engineering, Marmara Üniversitesi | |
| 2. | Hakan Yasarcan
|
| Industrial Engineering, Bogazici University |
Abstract
The El Farol Bar Problem (EFBP) is introduced by W.B.Arthur(1994) to present Complexity Economics. Arthur claims that if all agents use deductive reasoning, either all attend the bar or all stay home. Thus, deductive reasoning fails. Therefore, all agents use inductive reasoning with different strategies in forming their expectations about weekly attendance, which then be used in this binary decision-making process. Arthur states that when inductive reasoning is used, the mean attendance always converges to the bar capacity. The best-known strategy in the literature in terms of minimizing the variance in the attendance values is random attendance with the unstated assumption that the bar capacity is known. We suggest a new agent type called Yasarcan-Çetiner agents, which use a hysteresis structure in decision-making. These agents persist on keeping their current decisions as it is for a number of trials before switching their decisions; each individual agent has specific persistence thresholds. Yasarcan-Çetiner agents perform better than all existing agent types in the EFBP literature in terms of improving bar utilization and in minimizing the variance of weekly attendance values. It is not necessary for Yasarcan-Çetiner agents to know the bar capacity a priori; learning the bar capacity is an emergent collective behavior of the swarm, which is another contribution. We anticipate that Yasarcan-Çetiner agents will be used in other type of economic decision-making problems.
Keywords
- Agent Systems
- Decision Theory
- Simulation
Status: accepted
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