Pack Light on the Move: Exploitation and Exploration in a Dynamic Environment

Marco LiCalzi; Davide Marchiori

doi:10.1007/978-3-319-00912-4_16

Pack Light on the Move: Exploitation and Exploration in a Dynamic Environment

Authors:

LiCalzi, Marco ;
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Department of Marketing & Management, Faculty of Business and Social Sciences, SDU
Marchiori, Davide
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Department of Marketing & Management, Faculty of Business and Social Sciences, SDU

DOI:

10.1007/978-3-319-00912-4_16

Abstract:

This paper revisits a recent study by Posen and Levinthal (Manag Sci 58:587–601, 2012) on the exploration/exploitation tradeoff for a multi-armed bandit problem, where the reward probabilities undergo random shocks. We show that their analysis suffers two shortcomings: it assumes that learning is based on stale evidence, and it overlooks the steady state. We let the learning rule endogenously discard stale evidence, and we perform the long run analyses. The comparative study demonstrates that some of their conclusions must be qualified.

ISBN:

9783319009117, 9783319009124

Type:

Book chapter

Language:

English

Published in:

Lecture Notes in Economics and Mathematical Systems: Agent-based Approaches To Economics and Social Systems, 2014, p. 205-216

Main Research Area:

Social science

Publication Status:

Published

Series:

Lecture Notes in Economics and Mathematical Systems

Review type:

Peer Review

Publisher:

Springer

Submission year:

2014

Scientific Level:

Scientific

ID:

2185983718

Pack Light on the Move: Exploitation and Exploration in a Dynamic Environment

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