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Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games

Listed author(s):
  • Vincent P. Crawford

Harstad and Selten’s article in this forum performs a valuable service by highlighting the dominance of optimization-based models over boundedly rational models in modern microeconomics, and questioning whether optimization-based models are a better way forward than boundedly rational models. This article complements Rabin’s response to Harstad and Selten, focusing on modeling strategic behavior. I consider Harstad and Selten’s examples and proposed boundedly rational models in the light of modern behavioral economics and behavioral game theory, commenting on the challenges that remain and the most promising ways forward.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jel.51.2.512
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File URL: http://www.aeaweb.org/jel/ds/5102/JEL.51.2.512_ds.zip
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Article provided by American Economic Association in its journal Journal of Economic Literature.

Volume (Year): 51 (2013)
Issue (Month): 2 (June)
Pages: 512-527

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Handle: RePEc:aea:jeclit:v:51:y:2013:i:2:p:512-27
Note: DOI: 10.1257/jel.51.2.512
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  4. Ewerhart, Christian, 2000. "Chess-like Games Are Dominance Solvable in at Most Two Steps," Games and Economic Behavior, Elsevier, vol. 33(1), pages 41-47, October.
  5. Vincent P. Crawford & Miguel A. Costa-Gomes & Nagore Iriberri, 2013. "Structural Models of Nonequilibrium Strategic Thinking: Theory, Evidence, and Applications," Journal of Economic Literature, American Economic Association, vol. 51(1), pages 5-62, March.
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  8. Kagel, J.H. & Levin, D., 1988. "Independent Private Value Auctions: Bidder Behavior In First, Second And Third-Price Auctions With Varying Numbers Of Bidders," Papers 13, Houston - Department of Economics.
  9. Philippe Jehiel, 2005. "Analogy-Based Expectation Equilibrium," Levine's Bibliography 784828000000000106, UCLA Department of Economics.
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  23. Reinhard Selten & Klaus Abbink & Ricarda Cox, 2001. "Learning Direction Theory and the Winner’s Curse," Bonn Econ Discussion Papers bgse10_2001, University of Bonn, Germany.
  24. Ernst Fehr & Simon Gaechter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," CESifo Working Paper Series 336, CESifo Group Munich.
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