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Learning to be prepared

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Author Info
Kets, Willemien (Department of Econometrics and Operations Research)
Voorneveld, Mark () (Dept. of Economics, Stockholm School of Economics)

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Abstract

Behavioral economics provides several motivations for the common observation that agents appear somewhat unwilling to deviate from recent choices: salience, inertia, the formation of habits, the use of rules of thumb, or the locking in on certain modes of behavior due to 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 (2004, 2005).

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Publisher Info
Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 590.

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Length: 27 pages
Date of creation: 07 Mar 2005
Date of revision:
Handle: RePEc:hhs:hastef:0590

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Related research
Keywords: adjustment learning minimal prep sets behavioral bias salience

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Tercieux, Olivier & Voorneveld, Mark, 2005. "The cutting power of preparation," Working Paper Series in Economics and Finance 583, Stockholm School of Economics. [Downloadable!]
    Other versions:
  2. Basu, Kaushik & Weibull, Jorgen W., 1991. "Strategy subsets closed under rational behavior," Economics Letters, Elsevier, vol. 36(2), pages 141-146, June. [Downloadable!] (restricted)
    Other versions:
  3. 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. [Downloadable!] (restricted)
  4. 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.
  5. 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. [Downloadable!] (restricted)
  6. Sugden, Robert, 1995. "A Theory of Focal Points," Economic Journal, Royal Economic Society, vol. 105(430), pages 533-50, May. [Downloadable!] (restricted)
  7. 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. [Downloadable!] (restricted)
  8. Voorneveld, Mark & Kets, Willemien & Norde, Henk, 2005. "An axiomatization of minimal curb sets," Working Paper Series in Economics and Finance 589, Stockholm School of Economics, revised 18 Mar 2005. [Downloadable!]
    Other versions:
  9. Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 612-43, August. [Downloadable!] (restricted)
    Other versions:
  10. Ehud Kalai & Dov Samet, 1982. "Persistent Equilibria in Strategic Games," Discussion Papers 515, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  11. Hurkens Sjaak, 1995. "Learning by Forgetful Players," Games and Economic Behavior, Elsevier, vol. 11(2), pages 304-329, November. [Downloadable!] (restricted)
  12. Brigitte C. Madrian & Dennis F. Shea, 2000. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," NBER Working Papers 7682, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. 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, Blackwell Publishing, vol. 44(3), pages 533-47, October. [Downloadable!] (restricted)
  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. Voorneveld, Mark, 2005. "Persistent retracts and preparation," Games and Economic Behavior, Elsevier, vol. 51(1), pages 228-232, April. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tercieux, Olivier & Voorneveld, Mark, 2005. "The cutting power of preparation," Discussion Paper 94, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  2. Kets, W. & Voorneveld, M., 2007. "Congestion, Equilibrium and Learning: The Minority Game," Discussion Paper 2007-61, Tilburg University, Center for Economic Research. [Downloadable!]
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