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Players With Limited Memory

Author Info

Listed author(s):
  • Huck Steffen

    ()

    (University College London)

  • Sarin Rajiv

    ()

    (Texas A&M)

Abstract

This paper studies a model of memory. The model takes into account that memory capacity is limited and imperfect. We study how agents with such memory limitations, who have very little information about their choice environment, play games. We introduce the notion of a Limited Memory Equilibrium (LME) and show that play converges to an LME in every generic normal form game. Our characterization of the set of LME suggests that players with limited memory do (weakly) better in games than in decision problems. We also show that agents can do quite well even with severely limited memory, although severe limitations tend to make them behave cautiously.

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File URL: https://www.degruyter.com/view/j/bejte.2004.4.1/bejte.2004.4.1.1109/bejte.2004.4.1.1109.xml?format=INT
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Article provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.

Volume (Year): 4 (2004)
Issue (Month): 1 (September)
Pages: 1-27

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Handle: RePEc:bpj:bejtec:v:contributions.4:y:2004:i:1:n:6
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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; Information and Knowledge; Communication; Belief; Unawareness

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  1. Sethi, Rajiv, 2000. "Stability of Equilibria in Games with Procedurally Rational Players," Games and Economic Behavior, Elsevier, vol. 32(1), pages 85-104, July.
  2. Bergin, James & Lipman, Barton L, 1996. "Evolution with State-Dependent Mutations," Econometrica, Econometric Society, vol. 64(4), pages 943-956, July.
  3. Piccione, Michele & Rubinstein, Ariel, 1997. "On the Interpretation of Decision Problems with Imperfect Recall," Games and Economic Behavior, Elsevier, vol. 20(1), pages 3-24, July.
  4. Eric Friedman & Scott Shenker & Amy Greenwald, 1998. "Learning in Networks Contexts: Experimental Results from Simulations," Departmental Working Papers 199825, Rutgers University, Department of Economics.
  5. Gilboa, Itzhak & Schmeidler, David, 1996. "Case-Based Optimization," Games and Economic Behavior, Elsevier, vol. 15(1), pages 1-26, July.
  6. Eric Friedman & Scott Shenker, 1998. "Learning and Implementation on the Internet," Departmental Working Papers 199821, Rutgers University, Department of Economics.
  7. Sabourian, Hamid, 1998. "Repeated games with M-period bounded memory (pure strategies)," Journal of Mathematical Economics, Elsevier, vol. 30(1), pages 1-35, August.
  8. Chen, Yan, 1992. "Asynchrony and Learning in Serial and Average Cost Pricing Mechanisms: An Experimental Study," Discussion Paper Serie A 592, University of Bonn, Germany.
  9. Osborne, Martin J & Rubinstein, Ariel, 1998. "Games with Procedurally Rational Players," American Economic Review, American Economic Association, vol. 88(4), pages 834-847, September.
  10. Lehrer Ehud, 1994. "Finitely Many Players with Bounded Recall in Infinitely Repeated Games," Games and Economic Behavior, Elsevier, vol. 7(3), pages 390-405, November.
  11. Ellison, Glenn, 1997. "Learning from Personal Experience: One Rational Guy and the Justification of Myopia," Games and Economic Behavior, Elsevier, vol. 19(2), pages 180-210, May.
  12. Fernando Vega-Redondo, 1997. "The Evolution of Walrasian Behavior," Econometrica, Econometric Society, vol. 65(2), pages 375-384, March.
  13. John Conlisk, 1996. "Why Bounded Rationality?," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 669-700, June.
  14. Aumann, Robert J. & Sorin, Sylvain, 1989. "Cooperation and bounded recall," Games and Economic Behavior, Elsevier, vol. 1(1), pages 5-39, March.
  15. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
  16. James Dow, 1991. "Search Decisions with Limited Memory," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 1-14.
  17. Hurkens Sjaak, 1995. "Learning by Forgetful Players," Games and Economic Behavior, Elsevier, vol. 11(2), pages 304-329, November.
  18. Sendhil Mullainathan, 2002. "A Memory-Based Model of Bounded Rationality," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 735-774.
  19. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  20. Lehrer, Ehud, 1988. "Repeated games with stationary bounded recall strategies," Journal of Economic Theory, Elsevier, vol. 46(1), pages 130-144, October.
  21. Aner Sela & Dorothea Herreiner, 1999. "Fictitious play in coordination games," International Journal of Game Theory, Springer;Game Theory Society, vol. 28(2), pages 189-197.
  22. Sarin, Rajiv & Vahid, Farshid, 1999. "Payoff Assessments without Probabilities: A Simple Dynamic Model of Choice," Games and Economic Behavior, Elsevier, vol. 28(2), pages 294-309, August.
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Cited by:

  1. Yan Chen & Laura Razzolini & Theodore Turocy, 2007. "Congestion allocation for distributed networks: an experimental study," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(1), pages 121-143, October.
  2. Vostroknutov, Alexander, 2005. "Non-Probabilistic Decision Making with Memory Constraints," MPRA Paper 2653, University Library of Munich, Germany, revised Jul 2007.
  3. Oechssler, Jorg & Schipper, Burkhard, 2003. "Can you guess the game you are playing?," Games and Economic Behavior, Elsevier, vol. 43(1), pages 137-152, April.
  4. Katerina Sherstyuk & Nori Tarui & Melinda Podor Wengrin & Jay Viloria & Tatsuyoshi Saijo, 2014. "Other-regarding behavior under collective action," Working Papers 201404, University of Hawaii at Manoa, Department of Economics.
  5. Yilmaz Kocer, 2010. "Endogenous Learning with Bounded Memory," Working Papers 1290, Princeton University, Department of Economics, Econometric Research Program..
  6. Vostroknutov, Alexander, 2012. "Non-probabilistic decision making with memory constraints," Economics Letters, Elsevier, vol. 117(1), pages 303-305.

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