Learning with fixed rules: The minority game

This paper gives a critical account of the literature on adaptive behavior in the minority game, a simple congestion game. The literature has proposed a model which differs markedly from many standard learning models in that players are endowed with a fixed subset of behavioral rules or response modes which map the observed history to actions. These rules need not have a behavioral interpretation or be derived from some form of optimizing behavior. Nonetheless, this model gives rise to behavior that is close to equilibrium behavior at the aggregate level. The individual-level behavior predicted by the model seems to capture some aspects of observed experimental behavior that are difficult to explain using standard models. JEL classification: C73, C90.