Epistemic Horizon Minority Games When Abundance Reduces Strategic Value

Jul 16, 2026

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Strategic value can decline when an option becomes visible to more agents, because public attention can erase the advantage previously created by epistemic scarcity. The paper formalizes this mechanism as an epistemic-horizon minority game (EHMG) with bounded observation horizons, action-specific awareness, desire-biased utilities, and crowding-declining payoffs. It proves reductions to fixed-awareness potential games, finite monotone convergence, logit mean-field uniqueness under a norm condition, non-reducibility from static count congestion, and bounds for nonlinear revelation. Distinct disclosure signal structures are modeled and tested.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages18

Reading Time45 min

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arXiv :2607 .02765v 1 [ cs .GT] 2 Jul 2026 Epistemic Horizon Minority Games: When Abundance Reduces Strategic Value Faruk Alpay∗ Levent Sarıoğlu Department of Computer Engineering, Bahçeşehir University, Istanbul, Türkiye {faruk.alpay, [levent.sarioglu}@bahcesehir.edu.tr](levent.sarioglu}@bahcesehir.edu.tr) Abstract Strategic value can fall when an option becomes visible. A route, signal, bet, or opportunity may be attractive because few agents see it; public attention can erase the advantage it reveals. We formalize this mechanism as an epistemic-horizon minority game (EHMG), where agents have bounded observation horizons, action-specific awareness, desire-biased utilities, and payoffs that decline with crowding. The object is not a fixed congestion game with omitted actions, but an awareness-transition game on a finite lattice. We prove fixed-awareness potential-game reduction, finite monotone awareness convergence, logit mean-field uniqueness under an explicit norm condition, non-reducibility from static count-based congestion games, and sensitivity bounds for nonlinear revelation. We separate the target price of information from aggregate welfare loss, showing that they can coincide, diverge, or recommend opposite disclosure policies. Private revelation, public common revelation, and correlated group disclosure are modeled as distinct signal structures with different equilibrium effects. Experiments regenerate awareness sweeps, public visibility shocks, horizon–desire grids, information-constrained Braess examples, disclosure optimization, minimum harmful revelation, and counterfactual baselines isolating the epistemic mechanism from ordinary full-awareness congestion. Strategic trace encodings are evaluated as a controlled regime-recognition benchmark: raw trajectories, Fourier summaries, recurrence and Gramian images, image bundles, local-filter features, leakage probes, phase-scrambled controls, resolution and recurrence-threshold sweeps, spectral carriers, and IAAFT matched-null parameter-shift controls test whether trace encodings recover strategic structure under robust nulls. 1 Introduction In ordinary language, abundance suggests value. In strategic systems this intuition often fails. Ifa bar is enjoyable only when few people attend, a forecast that the bar will be empty can make it crowded. If a route is faster only when few drivers take it, public route guidance can erase its advantage. If a bet is attractive because a player wants a particular hand to win, the player’s own desire can leak into the perceived probability of success. In each case, value is not attached to the object alone. It is attached to how many agents see the object, how many desire it, and what each agent believes others will do. The El Farol bar problem was introduced by Arthur as a compact model of inductive reasoning under bounded rationality [2, 3] . Challet and Zhang’s minority game placed the same intuition into a game form in which agents benefit from being on the less crowded side [7, 24] . Congestion games formalize the general case in which an action’s payoff is a decreasing function of the number of users ∗ Corresponding author: [alpay@lightcap.ai](alpay@lightcap.ai) [19] . Braess’ paradox shows that adding an option to a decentralized network can make everyone worse off [5, 16]; informational Braess shows that additional information about options can also be harmful [1] . These literatures capture one part of the intuition: more access can reduce value. The missing part is epistemic. Agents do not choose in the world as a whole; they choose inside an observation horizon. A person walking through a forest can be locally coherent while omitting most simultaneous events from the decision model. A gambler can know that an event is random while still shifting a borderline prediction toward the wanted outcome. A community can disagree about an unobservable domain not merely because agents assign different probabili

FAQs

What causes strategic value to drop when abundance increases visibility?

The advantage can be tied to epistemic scarcity—few agents see or consider an option. When more agents become aware, the option’s perceived benefit can be revealed and crowding reduces payoffs, eliminating the prior strategic edge.

How does the epistemic-horizon minority game (EHMG) differ from standard congestion or minority games?

EHMG focuses on bounded observation horizons and incomplete awareness sets. It models awareness transitions and revelation of previously unobserved actions, rather than only decreasing payoffs with static counts of users.

What relationships does the paper establish between information value, welfare loss, and disclosure policy?

It distinguishes the target price of information from aggregate welfare loss and shows they can coincide, diverge, or even recommend opposite disclosure policies. It also models private, public, and correlated revelation as distinct signal structures with different equilibrium effects.

Jul 16, 2026

Upload by Maeve