Epistemic Horizon Minority Games: When Abundance Reduces Strategic Value

2026-07-02

AI Summary

This study addresses the paradox whereby increased information visibility can diminish strategic value by proposing a conscious-horizon minority game framework. It models strategic interactions as a congestion-aware, awareness-shifting game featuring limited observational horizons, action-specific cognition, and negative congestion externalities. Through potential game reduction, monotone convergence analysis, and Logit mean-field theory, the work demonstrates that under information disclosure mechanisms, the informational target price and social welfare loss may converge, diverge, or even imply opposing policy prescriptions, and that this model cannot be reduced to conventional static congestion games. Empirical validation confirms phenomena such as awareness expansion and public visibility shocks, enabling minimally harmful disclosure optimization. Furthermore, trajectory encoding effectively recovers underlying strategy structures, with robustness verified across multiple tests.

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, and where 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, while modeling private revelation, public common revelation, and correlated group disclosure 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 using 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 to test whether trace encodings recover strategic structure under robust nulls.

Problem

• epistemic horizon
• minority game
• strategic value
• information disclosure
• awareness transition

Innovation

• epistemic-horizon minority game
• awareness-transition game
• bounded observation horizon
• information disclosure policy
• strategic trace encoding