Choose Early or Choose Wisely - A Chinese Restaurant Game Approach

Abstract

Agents in a network often face situations requiring them to make decisions without sufficient information. In such situations, they may postpone their decisions in order to observe and collect more information through learning from other agents. In this paper, we discuss the advantages of the postponement strategy from a game- theoretic perspective. We propose an extension to Chinese Restaurant Game, a general framework for social learning. In the proposed extension, rational agents may change their decision order at will. We find that two important elements in Chinese Restaurant Game, social learning and negative network externality, still dominate agents’ decision process and the postponement strategy. We study a two-player case in detail. Through simulations, we find that the signal quality and table size ratio greatly influence whether a rational agent will apply the postponement strategy or not. In some cases, rational agents may postpone their decisions in response to some, but not all, signals they received. We observe that such a strategy is informative, which also helps other agents improve their strategies accordingly.