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Learning with bounded memory in games

Listed author(s):
  • Monte, Daniel

We study learning with bounded memory in zero-sum repeated games with one-sided incomplete information. The uninformed player has only a fixed number of memory states available. His strategy is to choose a transition rule from state to state, and an action rule, which is a map from each memory state to the set of actions. We show that the equilibrium transition rule involves randomization only in the intermediate memory states. Such randomization, or less frequent updating, is interpreted as a way of testing the opponent, which generates inertia in the player's behavior and is the main short-run bias in information processing exhibited by the bounded memory player.

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File URL: http://www.sciencedirect.com/science/article/pii/S0899825614000499
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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 87 (2014)
Issue (Month): C ()
Pages: 204-223

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Handle: RePEc:eee:gamebe:v:87:y:2014:i:c:p:204-223
DOI: 10.1016/j.geb.2014.03.005
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  8. Aumann, Robert J. & Hart, Sergiu & Perry, Motty, 1997. "The Absent-Minded Driver," Games and Economic Behavior, Elsevier, vol. 20(1), pages 102-116, July.
  9. Abreu, Dilip & Rubinstein, Ariel, 1988. "The Structure of Nash Equilibrium in Repeated Games with Finite Automata," Econometrica, Econometric Society, vol. 56(6), pages 1259-1281, November.
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