Optimal strategies in collective Parrondo games
Abstract
We present a modification of the so-called Parrondo's paradox where one is allowed to choose in each turn the game that a large number of individuals play. It turns out that, by choosing the game which gives the highest average earnings at each step, one ends up with systematic losses, whereas a periodic or random sequence of choices yields a steadily increase of the capital. An explanation of this behavior is given by noting that the short-range maximization of the returns is "killing the goose that laid the golden eggs". A continuous model displaying similar features is analyzed using dynamic programming techniques from control theory.
- Publication:
-
EPL (Europhysics Letters)
- Pub Date:
- August 2003
- DOI:
- 10.1209/epl/i2003-00461-5
- arXiv:
- arXiv:cond-mat/0212358
- Bibcode:
- 2003EL.....63..319D
- Keywords:
-
- 02.50.-r;
- 02.50.Ey;
- 05.40.-a;
- Probability theory stochastic processes and statistics;
- Stochastic processes;
- Fluctuation phenomena random processes noise and Brownian motion;
- Condensed Matter - Statistical Mechanics;
- Quantitative Finance - Portfolio Management
- E-Print:
- 4 pages, 6 figures, revised version in published form