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The Minority Game, invented in the late 1990s, makes it possible to understand stock market fluctuations in terms of information ecology between traders. With a minimal set of ingredients and drastic assumptions, this model reproduces market ecology among different types of traders. Its emphasis is on speculative trading and information flow.
List of contents
- 1: Introduction
- 2: Early works
- 3: Understanding the Minority Game dynamics
- 4: Minority Games as market models
- 5: Quest for better cooperation
- A: List of selected publications
- B: Source code
Summary
The Minority Game is a physicist's attempt to explain market behaviour by the interaction between traders. With a minimal set of ingredients and drastic assumptions, this model reproduces market ecology among different types of traders. Its emphasis is on speculative trading and information flow. The book first describes the philosophy lying behind the conception of the Minority Game in 1997, and includes in particular a discussion about the El Farol bar problem. It then reviews the main steps in later developments, including both the theory and its applications to market phenomena. 'Minority Games' gives a colourful and stylized, but also realistic picture of how financial markets operate.
Additional text
Physicist Challet, and one of his coauthors, Yi-Cheng Zhang, conceived of the Minority Game, a model problem explaining market behavior by the interaction between traders, in 1997. Here, they describe the philosophy behind the model, discuss the El Farol bar problem, and review the main steps in later developments, including both the theory and its applications to market phenomena. In addition to a primary readership of physicists, the book is written to be accessible to economists and researchers and practitioners in financial markets.
