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El Farol Bar
- W. Brian Arthur frequented a small, crowded bar called El Farol in Santa Fe.
- This bar inspired his El Farol problem, exploring how people predict attendance.
Deductive Rationality Fails
- Standard economic models, assuming identical rational actors, fail to explain the El Farol problem.
- If everyone uses the same prediction, the outcome negates the prediction itself.
Multiple Prediction Rules
- Arthur's model used multiple prediction rules (like an 'alphabet soup').
- Agents used several rules, tracking accuracy and acting on the best ones.