Game theory shows we can never learn perfectly from our mistakes
When people trade stocks, they don’t always learn from experience
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Even when we learn from past mistakes, we may never become optimal decision-makers. The finding comes from an analysis of a mathematical game that simulates a large economy, and suggests we may need to rethink some of the common assumptions built into existing economic theories.
In such theories, people are typically represented as rational agents who learn from past experiences to optimise their performance, eventually reaching a stable state in which they know how to maximise their earnings. This assumption…
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