Optimal strategies in collective Parrondo games
Abstract
We present a modification of the socalled 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 shortrange 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/i2003004615
 arXiv:
 arXiv:condmat/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
 EPrint:
 4 pages, 6 figures, revised version in published form