ISSN:
1432-1386
Keywords:
Key words: Bounded rationality
;
Cognitive rationality
;
Game equilibrium
;
Evolution
;
Learning
;
JEL-classification: B 41; C 73; D 83; D 84
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract. In game theory, four dynamic processes converging towards an equilibrium are distinguished and ordered by way of agents' decreasing cognitive capacities. In the eductive process, each player has enough information to simulate perfectly the others' behavior and gets immediately to the equilibrium. In epistemic learning, each player updates his beliefs about others' future strategies, with regard to their sequentially observed actions. In behavioral learning, each player modifies his own strategies according to the observed payoffs obtained from his past actions. In the evolutionary process, each agent has a fixed strategy and reproduces in proportion to the utilities obtained through stochastic interactions. All along the spectrum, longer term dynamics makes up for weaker rationality, and physical relations substitute for mental interactions. Convergence, if any, is towards an always stronger equilibrium notion and selection of an equilibrium state becomes more sensitive to context and history. The processes can be mixed if associated to different periods, agents or mechanisms and deepened if obtained by formal reasoning principles.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/s001910050056
