Learning to be Prepared
AbstractBehavioral 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 InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2005-117.
Date of creation: 2005
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learning; adjustment; minimal prep sets; availability bias; salience; rules of thumb;
Other versions of this item:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-12-14 (All new papers)
- NEP-CBE-2005-12-14 (Cognitive & Behavioural Economics)
- NEP-EVO-2005-12-14 (Evolutionary Economics)
- NEP-GTH-2005-12-14 (Game Theory)
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