ISSN:
1573-7187
Keywords:
Bounded rationality
;
Bayesian
;
prisoner's dilemma
Source:
Springer Online Journal Archives 1860-2000
Topics:
Sociology
,
Economics
Notes:
Abstract In this paper a model of boundedly rational decision making in the Finitely Repeated Prisoner's Dilemma is proposed in which: (1) each player is Bayesianrational; (2) this is common knowledge; (3) players are constrained by limited state spaces (their Bayesian minds) in ‘processing’ (1) and (2). Under these circumstances, we show that cooperative behavior may arise as an individually optimal response, except for the latter part of the game. Indeed, such behaviorwill necessarily obtain in long enough games if belief systems satisfy a natural condition: essentially, that all events consistent with the players' analysis of the game be attributed by them positive (although arbitrarily small) subjective probability.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF01079212
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