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Pack Light on the Move: Exploitation and Exploration in a Dynamic Environment

  • Marco LiCalzi
  • Davide Marchiori
Chapter
Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 669)

Abstract

This paper revisits a recent study by Posen and Levinthal (Manag Sci 58:587–601, 2012) on the exploration/exploitation tradeoff for a multi-armed bandit problem, where the reward probabilities undergo random shocks. We show that their analysis suffers two shortcomings: it assumes that learning is based on stale evidence, and it overlooks the steady state. We let the learning rule endogenously discard stale evidence, and we perform the long run analyses. The comparative study demonstrates that some of their conclusions must be qualified.

Keywords

Dynamic Environment Learning Model Turbulence Level Search Intensity Bandit Problem 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer International Publishing Switzerland 2014

Authors and Affiliations

  1. 1.Department of ManagementUniversità Ca’ Foscari VeneziaVeniceItaly

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