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Crowd-Anticrowd Theory of Multi-Agent Market Games

M. Hart, P. Jefferies, P. M. Hui, N. F. Johnson

cond-matarXiv:cond-mat/0008385

Abstract

We present a dynamical theory of a multi-agent market game, the so-called Minority Game (MG), based on crowds and anticrowds. The time-averaged version of the dynamical equations provides a quantitatively accurate, yet intuitively simple, explanation for the variation of the standard deviation (`volatility') in MG-like games. We demonstrate this for the basic MG, and the MG with stochastic strategies. The time-dependent equations themselves reproduce the essential dynamics of the MG.

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