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Learning to be Prepared

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  • Kets, W.
  • Voorneveld, M.

    (Tilburg University, Center for Economic Research)

Abstract

Behavioral economics provides several motivations for the common observation that agents appear somewhat unwilling to deviate from recent choices.More recent choices can be more salient than other choices, or more readily available in the agent's mind.Alternatively, agents may have formed habits, use rules of thumb, or lock in on certain modes of behavior as a result of learning by doing.This paper provides discrete-time adjustment processes for strategic games in which players display precisely such a bias towards recent choices.In addition, players choose best replies to beliefs supported by observed play in the recent past, in line with much of the literature on learning.These processes eventually settle down in the minimal prep sets of Voorneveld [Games Econ.Behav. 48 (2004) 403-414, and Games Econ.Behav. 51 (2005) 228-232].

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2005-117.

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Date of creation: 2005
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Handle: RePEc:dgr:kubcen:2005117

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Related research

Keywords: learning; adjustment; minimal prep sets; availability bias; salience; rules of thumb;

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References

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  1. Sugden, Robert, 1995. "A Theory of Focal Points," Economic Journal, Royal Economic Society, vol. 105(430), pages 533-50, May.
  2. Crawford, Vincent P & Haller, Hans, 1990. "Learning How to Cooperate: Optimal Play in Repeated Coordination Games," Econometrica, Econometric Society, vol. 58(3), pages 571-95, May.
  3. Tercieux, Olivier & Voorneveld, Mark, 2005. "The cutting power of preparation," Working Paper Series in Economics and Finance 583, Stockholm School of Economics.
  4. Milgrom, Paul & Roberts, John, 1991. "Adaptive and sophisticated learning in normal form games," Games and Economic Behavior, Elsevier, vol. 3(1), pages 82-100, February.
  5. Basu, Kaushik & Weibull, Jorgen W., 1991. "Strategy subsets closed under rational behavior," Economics Letters, Elsevier, vol. 36(2), pages 141-146, June.
  6. Hurkens Sjaak, 1995. "Learning by Forgetful Players," Games and Economic Behavior, Elsevier, vol. 11(2), pages 304-329, November.
  7. Voorneveld, Mark, 2004. "Preparation," Games and Economic Behavior, Elsevier, vol. 48(2), pages 403-414, August.
  8. Mark Voorneveld & Willemien Kets & Henk Norde, 2006. "An Axiomatization of Minimal Curb Sets," International Journal of Game Theory, Springer, vol. 34(1), pages 153-153, April.
  9. Voorneveld, Mark, 2005. "Persistent retracts and preparation," Games and Economic Behavior, Elsevier, vol. 51(1), pages 228-232, April.
  10. Grossman, Sanford J & Kihlstrom, Richard E & Mirman, Leonard J, 1977. "A Bayesian Approach to the Production of Information and Learning by Doing," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 533-47, October.
  11. Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Scholarly Articles 3196332, Harvard University Department of Economics.
  12. Fudenberg, Drew & Levine, David, 1998. "Learning in games," European Economic Review, Elsevier, vol. 42(3-5), pages 631-639, May.
  13. Vega-Redondo, Fernando, 1993. "Simple and Inertial Behavior: An Optimizing Decision Model with Imprecise Perceptions," Economic Theory, Springer, vol. 3(1), pages 87-98, January.
  14. Vega-Redondo, Fernando, 1995. "The Dynamics and Revealed Preference of Status-Quo Optimality," Economic Theory, Springer, vol. 6(2), pages 263-82, July.
  15. Joosten Reinoud & Peters Hans & Thuijsman Frank, 1995. "Unlearning by Not Doing: Repeated Games with Vanishing Actions," Games and Economic Behavior, Elsevier, vol. 9(1), pages 1-7, April.
  16. Brigitte C. Madrian & Dennis F. Shea, 2001. "THE POWER OF SUGGESTION: INERTIA IN 401(k) PARTICIPATION AND SAVINGS BEHAVIOR," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1149-1187, November.
  17. Ehud Kalai & Dov Samet, 1982. "Persistent Equilibria in Strategic Games," Discussion Papers 515, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Cited by:
  1. Dieter Balkenborg & Josef Hofbauer & Christoph Kuzmics, 2008. "Refined best-response correspondence and dynamics," Discussion Papers 0806, Exeter University, Department of Economics.
  2. Tercieux, O.R.C. & Voorneveld, M., 2005. "The Cutting Power of Preparation," Discussion Paper 2005-94, Tilburg University, Center for Economic Research.
  3. Grandjean Gilles & Mauleon Ana & Vannetelbosch Vincent, 2009. "Strongly Rational Sets for Normal-Form Games," Research Memorandum 059, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. Dieter Balkenborg & Josef Hofbauer & Christoph Kuzmics, 2011. "Refined best reply correspondence and dynamics," Working Papers 451, Bielefeld University, Center for Mathematical Economics.
  5. Olivier Tercieux & Mark Voorneveld, 2010. "The cutting power of preparation," Computational Statistics, Springer, vol. 71(1), pages 85-101, February.
  6. Kets, W. & Voorneveld, M., 2007. "Congestion, Equilibrium and Learning: The Minority Game," Discussion Paper 2007-61, Tilburg University, Center for Economic Research.

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