OPIM 319: Advanced Decision Systems: Agents, Games, and Evolution (AGE) Syllabus, Spring 2012

Professor Steven O. Kimbrough, Instructor 3:00-4:20 p.m., Tuesdays and Thursdays, JMHH F94 Ofce hours: 565 JMHH, 9-12 Tuesdays and by appointment March 13, 2012

Class Description

OPIM 319, Agents, Games, and Evolution, explores applications and fundamentals of strategic behavior. Strategic, or game-theoretic, topics arise throughout the social sciences. The topics include and we shall studytrust, cooperation, market-related phenomena (including price equilibria and distribution of wealth), norms, conventions, commitment, coalition formation, and negotiation. They also include such applied matters as design of logistics systems, auctions, and markets generally (for example, markets for electric power generation). In addressing these topics we focus on the practical problem of nding effective strategies for agents in strategic situations (or games). Our method of exploration will be experimental: we review and discuss experiments on the behavior of agents in strategic (or game-theoretic) situations. In focusing on the design and behavior of articial agents in strategic (or game-theoretic) situations, we will be especially concerned with strategic contexts of commercial import, such as markets, bargaining, and repeated play. We shall dwell on effective agent learning techniques, including evolutionary methods and reinforcement learning. A main theme in the course is the inherent difculty, even unknowability, of the problem of strategy acquisition. We will rely mainly on computational experiments (or simulations), in distinction to analytic mathematical methods, for studying strategy formation and strategic behavior (either by individuals or by groups). Much of the class work will be devoted to discussing and interpreting computational experiments that have been reported in the literature, or that can be undertaken with tools provided in class. In doing so, we draw upon the rapidly growing literature in agent-based modeling and agent-based simulation. Agent-Based Computational Economics (for example, http://www. econ.iastate.edu/tesfatsi/ace.htm) and Agent-Based Social Science (for example,

http://www.brookings.edu/es/dynamics/papers/csed_wp41.htm) have come to denote active communities of research and application. We shall draw upon them. Computer programming is neither required nor discouraged for the course. The instructor invites, and will support, projects using NetLogo (as well as other envirnments). Many of the computational demonstrations and experiments we will examine are available as NetLogo programs (http://ccl.northwestern.edu/netlogo/). Students are not, however, at all required to undertake programming exercises, in NetLogo or in any other environment. Students completing the course can expect to come away with: Solid understanding of what is known and what is not known about the problem of designing procedures for strategic behavior, Familiarity with the principal methods, and results of applying those methods, for the modeling of human agents and design of articial agents in strategic contexts, and Deepened appreciation for contexts of strategic interaction. Grading is based on class participation, assigned short essays undertaken during the term, a midterm quiz, and a term project. For further information, contact the principal instructor for the course, Professor Steven O. Kimbrough (kimbrough@wharton.upenn.edu).

Required Texts
The Evolution of Cooperation, by Robert Axelrod, (Axelrod, 1984). Growing Articial Societies, Joshua Epstein and Robert Axtell, (Epstein and Axtell, 1996). Agents, Games, and Evolution, by Steven Orla Kimbrough, (Kimbrough, 2012).

In addition, various other readings will be assigned. These will generally be handed out or made available online.

Class Schedule
1. Introduction and overview of the course. Strategic interaction. Illustrations of games in the wild. Read: Contexts of Strategic Interaction, (Kimbrough, 2012, chapter 1). 2. Games in the wild, emergence and other surprises in strategic interaction. More on games in the wild.

Read: Games in the Wild and the Problems of Play (Kimbrough, 2012, chapter 2); Micromotives and Macrobehavior, (Schelling, 1978, pages 1143). (File: MicromotivesAndMacrobehavior.pdf.) Note: Schelling recently (10 October 2005) won a Nobel Prize for doing this sort of work. http://nobelprize.org/economics/laureates/2005/press.html. 3. The problems of cooperation. Read: The Tragedy of the Commons, by Garrett Hardin (Hardin, 1968) (File: hardin-tragedy-commons.pdf); The Evolution of Cooperation, by Robert Axelrod, Basic Books, 1984, chapters 13, appendix B, (Axelrod, 1984). 4. Cooperation and its evolution. Read: The Evolution of Cooperation, by Robert Axelrod, Basic Books, 1984, chapters 45, (Axelrod, 1984). 5. Cooperation and its evolution. Read: The Evolution of Cooperation, by Robert Axelrod, Basic Books, 1984, chapters 69 (skim) , (Axelrod, 1984); Playing Prisoners Dilemma, (Kimbrough, 2012, chapter 3). 6. Classical game theory, its elements and discontents. Instructor handout. Recommended reading: Ross, Don, Game Theory, The Stanford Encyclopedia of Philosophy (Spring 2006 Edition), Edward N. Zalta (ed.), URL = http://plato.stanford. edu/archives/spr2006/entries/game-theory/. 7. Fairness and ultimatum games; commitment; reciprocity. Read: Brian Skyrms, Evolution of the Social Contract, (Skyrms, 1996) chapters 1-2 (Sex and Justice, pp. 1-21; Commitment, pp. 22-44), Cambridge University Press, 1996. Posted on WebCaf e as skyrms-evo-soc-contract-1and2.pdf; Fanning out: 22 Games and Models, (Kimbrough, 2012, chapter 4). 8. The Stag Hunt. Theme: Trust. Read: Brian Skyrms, The Stag Hunt and the Evolution of Social Structure, (Skyrms, 2004) Preface (pp. xi-xiv) and chapter 1, The Stag Hunt (pp. 1-14), Cambridge University Press, 2004. (File: Skyrms-StagHunt-Pref-Ch1.pdf.) 9. Framing. Affording Cooperation, (Kimbrough, 2012, chapter 7).

10. Growing articial societies. Read: Growing Articial Societies: Social Science from the Bottom Up, by Joshua Epstein and Robert Axtell, MIT Press, 1996, (Epstein and Axtell, 1996, Chapters 1-2-3). 11. Growing articial societies. Read: Growing Articial Societies: Social Science from the Bottom Up, by Joshua Epstein and Robert Axtell, MIT Press, 1996, (Epstein and Axtell, 1996, Chapters 4 to end). 12. Mid-term quiz. Covering classes 19. 13. Strategic Analysis. Instructor handout. 14. Play IDS games in lab. 15. Discuss IDS games. * * * Spring break week of 5 March 2012 *** 16. Markets: Competitive. Read: Competitive Markets (Kimbrough, 2012, chapter 8) and Zero-Intelligence Agents, Gode and Sunder (1993) (le: gode-sunder-1993.pdf on WebCaf e). Recommended reading: Gode and Sunder (1997) (le: gode-sunder-1997.pdf on WebCaf e). 17. Markets: Monopolies, Oligopolies. Read: Monopoly Stories (Kimbrough, 2012, chapter 9), Oligopoly: Cournot Competition and Oligopoly: Bertrand Competition, (Kimbrough, 2012, chapters 1011). Recommended skim: Supply Curve Bidding, (Kimbrough, 2012, chapter 12). 18. Two-Sided Matching. Read: Two-Sided Matching, (Kimbrough, 2012, chapter 13). Recommended reading: Todd (2007) (le: todd.evolsocmind.2007.pdf) and then Kurzban (2010) (le: RNH draft.doc). (See Kurzban/ folder on WebCaf e for les.) Recommended reading: Erotic Capital, (Hakim, 2010) (le: EurSociolRev-2010-Hakim-499-518.pdf on WebCaf e). Recommended reading: D. Gale and L. S. Shapley, 1962. College Admissions and the Stability of Marriage, The American Mathematical Monthly, 69, no. 1, pp. 915, (Gale and Shapley, 1962) (le: gale-shapley-1962.pdf on WebCaf e); Lawrence Bodin and 4 Quiz #1

Aaron Panken, 2003. High Tech for a Higher Authority: The Place of Graduating Rabbis from Hebrew Union CollegeJewish Institute of Religion, Interfaces, 33, no. 3, MayJune, pp. 1-11, (Bodin and Panken, 2003). 19. Lying & Other Abuses in Negotiations. Read: Lying and Related Abuses, (Kimbrough, 2012, chapter 17). 20. Evolution and evolutionary algorithms. Read: (Kimbrough, 2012, chapter 18); (strongly recommended:) Darwin, concluding chapter of The Origin of Species Darwin-Origin-Chapt14-1st-ed.pdf on webCaf e, online at http: //www.literature.org/authors/darwin-charles/the-origin-of-species/ chapter-14.html. Briey on ANNs (articial neural networks). 21. Evolutionary models and games. Read: Excerpt from Blondie24, le Blondie24/B-49127 Blondie 24.pdf, on WebCaf e (Fogel, 2002); Evolutionary Models, (Kimbrough, 2012, chapter 18). 22. Topics in strategic interaction, 1. The beer game. Recommended reading: (Kimbrough et al., 2002). Bargaining. Theory, machine learning. Read (skim): Bargaining, (Kimbrough, 2012, chapter 16). 23. Topics in Strategic Interaction, 2. Common-pool resources and public goods. Source material: (Ostrom, 1990; Ostrom et al., 1994). Lecture. Read Rules, Games, and Common-Pool Resource Problems (Ostrom et al., 1994, chapter 1) and Institutional Analysis and Common-Pool Resources (Ostrom et al., 1994, chapter 2). Mutual aid. Read: Mutual Aid in the Marketplace, Solnit (2009, pages 183194) (le: SolnitParadiseHellExcerpt911.pdf on WebCaf e). 24. Backward induction and rationality redux. Summing up. Read: Backward Induction, Summing up, (Kimbrough, 2012, chapters 1920). 25. Student presentations. 5

26. Student presentations. 27. Student presentations. 28. Last class. Quiz. Short quiz. Friday, May 4, 2012, 5 p.m., nal (term) project due. Quiz #2

Grades and Conduct of Class

Grading will be based on several components, roughly as follows. 20% Homework assignments. This will be given out occasionally. Mostly 12 pages of writeup. 10% Class participation (including attendance). 20% Mid-term quiz. 20% End-of-term quiz. 30% Term project. About 1520 page paper on a topic related to the class. Instructor will have topic suggestions. May be done in groups with prior permission, but net effort should be commensurate with individual projects. Preliminary presentations given during classes 24 26 and assessed by all students in the class. Friday, May 4, 2012, 5 p.m., nal (term) project due. Most of all, I want to see you engaged and involved in the class. Ill prepare lectures for the classes, but much prefer to conduct class with lots of interactive, give and take, and discussion. Also: I like jazz and will improvise during the semester. The syllabus may well (will likely) change as we go along. Ill let you know when it does and the quiz dates will not be changed.

Calendar, Spring 2012

Class meets on Tuesdays and Thursdays, 3:004:20 p.m. There are 28 sessions in all. First class, Thursday, 12 January 2012. Last class, Tuesday, 24 April 2012. No classes the week of March 5 (not 6 and 8), spring break.

0 1 2 3 4 5 6 7 8 9

0 R: 2012-01-12 T: 2012-01-17 R: 2012-01-19 T: 2012-01-24 R: 2012-01-26 T: 2012-01-31 R: 2012-02-02 T: 2012-02-7 R: 2012-02-9

1 T: 2012-02-14 R: 2012-02-16 T: 2012-02-21 R: 2012-02-23 T: 2012-02-28 R: 2012-03-01 T: 2012-03-13 R: 2012-03-15 T: 2012-03-20 R: 2012-03-22

2 T: 2012-03-27 R: 2012-03-29 T: 2012-04-03 R: 2012-04-05 T: 2012-04-10 R: 2012-04-12 T: 2012-04-17 R: 2012-04-19 T: 2012-04-24

Table 1: Class number :: date correlation, for Tuesday (T) and Thursday (R) classes, spring 2012

References
Axelrod, R. (1984). The Evolution of Cooperation. Basic Books, Inc., New York, NY. Bodin, L. and Panken, A. (2003). High tech for a higher authority: The place of graduating rabbis from Hebrew Union CollegeJewish Institute of Religion. Interfaces, 33(3):111. Epstein, J. M. and Axtell, R. (1996). Growing Articial Societies: Social Science from the Bottom Up. The MIT Press, Cambridge, MA. Fogel, D. B. (2002). Blondie24: Playing at the Edge of AI. Morgan Kaufmann, San Francisco, CA. Gale, D. and Shapley, L. S. (1962). College admissions and the stability of marriage. The American Mathematical Monthly, 69(1):915. Gode, D. K. and Sunder, S. (1993). Allocative efciency of markets with zero-intelligence traders: Market as a partial substitute for individual rationality. Journal of Political Economy, 101(1):119137. Gode, D. K. and Sunder, S. (1997). What makes markets allocationally efcient? Journal of Economics, 112:603630. Quarterly

Hakim, C. (2010). Erotic capital. European Sociological Review, 26(5):499518. First published online: March 19, 2010. doi: 10.1093/esr/jcq014. Hardin, G. (1968). The tragedy of the commons. Science, 162(3859):12431248. Kimbrough, S. O. (2012). Agents, Games, and Evolution: Strategies at Work and Play. CRC Press, Boca Raton, FL. 7

Kimbrough, S. O., Wu, D. J., and Zhong, F. (2002). Computers play the beer game: Can articial agents manage supply chains? Decision Support Systems, 33(3):323333. Kurzban, R. (2010). The relationship negotiation hypothesis. Working paper, University of Pennsylvania, Philadelphia, PA. File: RNH draft.doc. Ostrom, E. (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press, Cambridge, UK. Ostrom, E., Gardner, R., and Walker, J. (1994). Rules, Games, & Common-Pool Resources. University of Michigan Press, Ann Arbor, MI. Schelling, T. C. (1978). Micromotives and Macrobehavior. W.W. Norton & Company, New York, NY. Skyrms, B. (1996). Evolution of the Social Contract. Cambridge University Press, Cambridge, UK. Skyrms, B. (2004). The Stag Hunt and the Evolution of Social Structure. Cambridge University Press, Cambridge, UK. Solnit, R. (2009). A Paradise Built in Hell: The Extraordinary Communities That Arise in Disaster. Viking, New York, NY. Todd, P. M. (2007). Coevolved cognitive mechanisms in mate search. In Forgas, J. P., Haselton, M. G., and von Hippel, W., editors, Evolution and the Social Mind: Evolutionary Psychology and Social Cognition (Sydney Symposium in Social Psychology), pages 145159. Psychology Press. File: todd.evolsocmind.2007.pdf, available at http://www.indiana.edu/abcwest/ pmwiki/pdf/todd.evolsocmind.2007.pdf.

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