Parrondo's paradox and the risks of short-range optimization

Details Parrondo's paradox and the risks of short-range optimization Parrondo's paradox and the risks of short-range optimization

2002-12-16

arxiv.org/abs/cond-mat/0212358v1

Physics

Condensed Matter

Statistical Mechanics

4 pages, 6 figures, REVTeX4, submitted to Phys Rev Lett

Scientific paper

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 loses, 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.

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