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Rationality, Computability, and Nash Equilibrium

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Canning, David

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Abstract

Suppose two agents play a game, each using a computable algorithm to decide what to do, these algorithms being common knowledge. The author shows that it is possible to act rationally provided he limits his attention to a natural subset of solvable games and to opponents who use rational algorithms; the outcome is a Nash equilibrium. Going further, the author shows that rationality is possible on many domains of games and opposing algorithms but each domain requires a particular solution algorithm; no one algorithm is rational on all possible domains. Copyright 1992 by The Econometric Society.

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Publisher Info
Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 60 (1992)
Issue (Month): 4 (July)
Pages: 877-88
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Handle: RePEc:ecm:emetrp:v:60:y:1992:i:4:p:877-88

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  1. Matsushima, Hitoshi, 1997. "Bounded Rationality in Economics: A Game Theorist's View," CIRJE F-Series 97-F-10, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
  2. David K Levine & Balázs Szentes, 2006. "Can A Turing Player Identify Itself?," Levine's Working Paper Archive 618897000000001015, David K. Levine. [Downloadable!]
  3. William R. Zame, 1995. "Non-Computable Strategies and Discounted Repeated Games," UCLA Economics Working Papers 735, UCLA Department of Economics. [Downloadable!]
    Other versions:
  4. Sheri M. Markose, 2004. "Novelty And Surprises In Complex Adaptive System (CAS) Dynamics: A Computational Theory of Actor Innovation," Economics Discussion Papers 575, University of Essex, Department of Economics. [Downloadable!]
  5. Siegfried Berninghaus & Werner Güth & Hartmut Kliemt, . "Reflections on Equilibrium - Ideal Rationality and Analytic Decomposition of Games," Papers on Strategic Interaction 2003-08, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
    Other versions:
  6. David Levine & Balázs Szentes, 2006. "Can A Turing Player Identify Itself?," Economics Bulletin, Economics Bulletin, vol. 1(1), pages 1-6. [Downloadable!]
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