Heterogeneous Beliefs and Local Information In Stochastic Fictitious Play

44 Pages Posted: 15 Nov 2007

See all articles by Drew Fudenberg

Drew Fudenberg

Massachusetts Institute of Technology (MIT)

Satoru Takahashi

Harvard University - Department of Economics

Date Written: November 1, 2007

Abstract

Stochastic fictitious play (SFP) assumes that agents do not try to influence the future play of their current opponents, an assumption that is justified by appeal to a setting with a large population of players who are randomly matched to play the game. However, the dynamics of SFP have only been analyzed in models where all agents in a player role have the same beliefs. We analyze the dynamics of SFP in settings where there is a population of agents who observe only outcomes in their own matches and thus have heterogeneous beliefs. We provide conditions that ensure that the system converges to a state with homogeneous beliefs, and that its asymptotic behavior is the same as with a single representative agent in each player role.

Suggested Citation

Fudenberg, Drew and Takahashi, Satoru, Heterogeneous Beliefs and Local Information In Stochastic Fictitious Play (November 1, 2007). Harvard Institute of Economic Research Discussion Paper No. 2143. Available at SSRN: https://ssrn.com/abstract=1030328 or http://dx.doi.org/10.2139/ssrn.1030328

Drew Fudenberg (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Satoru Takahashi

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

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