The Interactive Minority Game: a Web-based investigation of human market interactions

Details The Interactive Minority Game: a Web-based investigation of human market interactions The Interactive Minority Game: a Web-based investigation of human market interactions

2003-09-09

arxiv.org/abs/nlin/0309033v2

Physica A 331 (2004) 651-659

Nonlinear Sciences

Adaptation and Self-Organizing Systems

11 pages, 1 table, 5 figures. This replacement contains a few small corrections made during publication

Scientific paper

10.1016/j.physa.2003.07.002

The unprecedented access offered by the World Wide Web brings with it the potential to gather huge amounts of data on human activities. Here we exploit this by using a toy model of financial markets, the Minority Game (MG), to investigate human speculative trading behaviour and information capacity. Hundreds of individuals have played a total of tens of thousands of game turns against computer-controlled agents in the Web-based_Interactive Minority Game_. The analytical understanding of the MG permits fine-tuning of the market situations encountered, allowing for investigation of human behaviour in a variety of controlled environments. In particular, our results indicate a transition in players' decision-making, as the markets become more difficult, between deductive behaviour making use of short-term trends in the market, and highly repetitive behaviour that ignores entirely the market history, yet outperforms random decision-making. PACS: 02.50.Le; 89.65.Gh; 89.70.+c Keywords: Decision theory and game theory; Economics and financial markets; Information theory

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