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(Un)Bounded Rationality in Decision Making and Game Theory – Back to Square One?

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Author Info

  • Werner Güth

    ()
    (Max Planck Institute of Economics, Kahlaische Straße 10, 07745 Jena, Germany)

  • Hartmut Kliemt

    ()
    (Frankfurt School of Finance and Management, Sonnemannstraße 9-11, 60314 Frankfurt am Main, Germany)

Abstract

Game and decision theory start from rather strong premises. Preferences, represented by utilities, beliefs represented by probabilities, common knowledge and symmetric rationality as background assumptions are treated as “given.” A richer language enabling us to capture the process leading to what is “given” seems superior to the stenography of decision making in terms of utility cum probability. However, similar to traditional rational choice modeling, boundedly rational choice modeling, as outlined here, is far from being a “global” theory with empirical content; rather it serves as a tool to formulate “local” theories with empirical content.

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Bibliographic Info

Article provided by MDPI, Open Access Journal in its journal Games.

Volume (Year): 1 (2010)
Issue (Month): 1 (March)
Pages: 53-65

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Handle: RePEc:gam:jgames:v:1:y:2010:i:1:p:53-65:d:7584

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Related research

Keywords: bounded rationality; methodology of decision; game theory;

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  1. Güth, Werner & Vittoria Levati, M. & Ploner, Matteo, 2010. "Satisficing in strategic environments: A theoretical approach and experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(5), pages 554-561, October.
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Cited by:
  1. Elsner, Wolfram & Schwardt, Henning, 2012. "Trust and Arena Size. Expectations, Trust, and Institutions Co-Evolving, and Their Critical Population and Group Sizes," MPRA Paper 40393, University Library of Munich, Germany.

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