El Farol Problem



Taking the chance that I will eat at “El Farol” this week, I want to share the famous “El Farol” Paper from Brian Arthur with you. The type of rationality assumed in economics, perfect, logical, deductive rationality, is useful for generating solutions to theoretical problems. But how do humans reason in situations that are complicated or ill-defined,? Unfortunately we rely too much on Inductive Reasoning. Here a nice explanation on this paper. Enjoy








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