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Satisficing: A 'Pretty Good' Heuristic

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Author Info

  • Bendor Jonathan Brodie

    ()
    (Stanford University)

  • Kumar Sunil

    ()
    (Stanford University)

  • Siegel David A

    ()
    (Florida State University)

Abstract

One of the best known ideas in the study of bounded rationality is Simon's satisficing; yet we still lack a standard formalization of the heuristic and its implications. We propose a mathematical model of satisficing which explicitly represents agents' aspirations and which explores both single-person and multi-player contexts. The model shows that satisficing has a signature performance-profile in both contexts: (1) it can induce optimal long-run behavior in one class of problems but not in the complementary class; and (2) in the latter, it generates behavior that is sensible but not optimal. The model also yields empirically testable predictions: in certain bandit-problems it pins down the limiting probabilities of each arm's use, and it provides an ordering of the arms' dynamical use-probabilities as well.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.

Volume (Year): 9 (2009)
Issue (Month): 1 (March)
Pages: 1-38

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Handle: RePEc:bpj:bejtec:v:9:y:2009:i:1:n:9

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Cited by:
  1. Arieli, Itai & Babichenko, Yakov, 2012. "Average testing and Pareto efficiency," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2376-2398.

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