Bounded Rationality:Static Versus Dynamic Approaches
AbstractTwo kinds of theories of boundedly rational behavior are possible. Static theories focus on stationary behavior and do not include any explicit mechanism for temporal change. Dynamic theories, on the other hand, explicitly model the fine-grain adjustments made by the subjects in response to their recent experiences. The main contribution of this paper is to argue that the restrictions usually imposed on the distribution of choices in the static approach are generically not supported by a dynamic adjustment mechanism. The genericity here is understood both in the measure theoretic and in the topological sense.
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Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 874.
Length: 42 pages
Date of creation: 2003
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Other versions of this item:
- Suren Basov, 2005. "Bounded rationality: static versus dynamic approaches," Economic Theory, Springer, vol. 25(4), pages 871-885, 06.
- Suren Basov, 2002. "Bounded Rationality: Static versus Dynamic Approach," Department of Economics - Working Papers Series 864, The University of Melbourne.
- C0 - Mathematical and Quantitative Methods - - General
- D7 - Microeconomics - - Analysis of Collective Decision-Making
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