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Extending the El Farol Bar Game with Partial Observability and Incentive Design
Iosif Polenakis, Kalliopi Kastampolidou, Theodore Andronikos
https://arxiv.org/abs/2606.04753 https://arxiv.org/pdf/2606.04753 https://arxiv.org/html/2606.04753
arXiv:2606.04753v1 Announce Type: new
Abstract: The El Farol Bar game is a classic model of coordination under uncertainty, traditionally treating the venue as a passive constraint. In this work, we re-conceptualize the problem by modeling the bar as a strategic player equipped with AI-driven learning capabilities. We extend the original framework to include partial observability, i.e., agents observe only subsets of past attendees, and transform the bar from a passive capacity threshold into an active mechanism designer that adjusts pricing policies to balance revenue, utilization, and sustainability constraints. Agents employ AI-based learning to form beliefs and adapt attendance strategies under incomplete information, while the bar uses policy learning to optimize dynamic pricing. The resulting two-sided learning system frames coordination as a co-evolutionary process between boundedly rational agents and an adaptive institution, offering insights into congestion management, resource allocation, and mechanism design in complex adaptive systems.
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