IDEAS home Printed from https://ideas.repec.org/a/nos/voprec/2014-05-2.html
   My bibliography  Save this article

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

Author

Listed:
  • V. P. Crawford.

Abstract

The paper is a comment on the article by R. Harstad and R. Selten and considers the tradeoff between bounded rationality and optimization models in the game-theoretic context. The author shows that in most of the models elements of opimization are still retained and that it is thus more productive to further improve the optimization-based modeling rather than to abandon them altogether in favour of bounded rationality.

Suggested Citation

  • V. P. Crawford., 2014. "Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
  • Handle: RePEc:nos:voprec:2014-05-2
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    2. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 817-869.
    3. Rosenthal, Robert W, 1989. "A Bounded-Rationality Approach to the Study of Noncooperative Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 18(3), pages 273-291.
    4. Spiegler, Ran, 2014. "Bounded Rationality and Industrial Organization," OUP Catalogue, Oxford University Press, number 9780199334261.
    5. Kagel, John H & Levin, Dan & Harstad, Ronald M, 1995. "Comparative Static Effects of Number of Bidders and Public Information on Behavior in Second-Price Common Value Auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 24(3), pages 293-319.
    6. Lei, Vivian & Noussair, Charles N & Plott, Charles R, 2001. "Nonspeculative Bubbles in Experimental Asset Markets: Lack of Common Knowledge of Rationality vs. Actual Irrationality," Econometrica, Econometric Society, vol. 69(4), pages 831-859, July.
    7. Xavier Gabaix, 2014. "A Sparsity-Based Model of Bounded Rationality," The Quarterly Journal of Economics, Oxford University Press, vol. 129(4), pages 1661-1710.
    8. R. Myerson., 2010. "Nash Equilibrium and the History of Economic Theory," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 6.
    9. Jehiel, Philippe, 2005. "Analogy-based expectation equilibrium," Journal of Economic Theory, Elsevier, vol. 123(2), pages 81-104, August.
    10. Vincent P. Crawford & Miguel A. Costa-Gomes, 2006. "Cognition and Behavior in Two-Person Guessing Games: An Experimental Study," American Economic Review, American Economic Association, vol. 96(5), pages 1737-1768, December.
    11. Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 1039-1061.
    12. Crawford, Vincent P, 1995. "Adaptive Dynamics in Coordination Games," Econometrica, Econometric Society, vol. 63(1), pages 103-143, January.
    13. Young, H. Peyton, 2004. "Strategic Learning and its Limits," OUP Catalogue, Oxford University Press, number 9780199269181.
    14. S. Dellavigna., 2011. "Psychology and Economics: Evidence from the Field," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
    15. 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.
    16. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 47-70, March.
    17. Mark Armstrong & Steffen Huck, 2011. "Behavioral Economics as Applied to Firms: A Primer," Antitrust Chronicle, Competition Policy International, vol. 1.
    18. Allen F. & Morris S. & Postlewaite A., 1993. "Finite Bubbles with Short Sale Constraints and Asymmetric Information," Journal of Economic Theory, Elsevier, vol. 61(2), pages 206-229, December.
    19. Reinhard Selten & Klaus Abbink & Ricarda Cox, 2005. "Learning Direction Theory and the Winner’s Curse," Experimental Economics, Springer;Economic Science Association, vol. 8(1), pages 5-20, April.
    20. Kagel, John H & Harstad, Ronald M & Levin, Dan, 1987. "Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study," Econometrica, Econometric Society, vol. 55(6), pages 1275-1304, November.
    21. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    22. Adam Brandenburger, 1992. "Knowledge and Equilibrium in Games," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 83-101, Fall.
    23. Kagel, John H & Levin, Dan, 1993. "Independent Private Value Auctions: Bidder Behaviour in First-, Second- and Third-Price Auctions with Varying Numbers of Bidders," Economic Journal, Royal Economic Society, vol. 103(419), pages 868-879, July.
    24. Reinhard Selten & Thorsten Chmura & Sebastian J. Goerg, 2011. "Stationary Concepts for Experimental 2 X 2 Games: Reply," American Economic Review, American Economic Association, vol. 101(2), pages 1041-1044, April.
    25. Matthew Rabin, 2002. "Inference by Believers in the Law of Small Numbers," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 775-816.
    26. Reinhard Selten & Thorsten Chmura, 2008. "Stationary Concepts for Experimental 2x2-Games," American Economic Review, American Economic Association, vol. 98(3), pages 938-966, June.
    27. R. M. Harstad & R. Selten., 2014. "Bounded-Rationality Models: Tasks to Become Intellectually Competitive," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
    28. Arad, Ayala & Rubinstein, Ariel, 2012. "Multi-dimensional iterative reasoning in action: The case of the Colonel Blotto game," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 571-585.
    29. 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.
    30. Philippe Jehiel, 2005. "Analogy-Based Expectation Equilibrium," Levine's Bibliography 784828000000000106, UCLA Department of Economics.
    31. Tirole, Jean, 1982. "On the Possibility of Speculation under Rational Expectations," Econometrica, Econometric Society, vol. 50(5), pages 1163-1181, September.
    32. 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.
    33. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    34. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    35. Reinhard Selten & Klaus Abbink & Ricarda Cox, 2005. "Learning Direction Theory and the Winner’s Curse," Experimental Economics, Springer;Economic Science Association, vol. 8(1), pages 5-20, April.
    36. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    37. Johnson, Eric J. & Camerer, Colin & Sen, Sankar & Rymon, Talia, 2002. "Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining," Journal of Economic Theory, Elsevier, vol. 104(1), pages 16-47, May.
    38. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    39. Camerer, Colin F. & Ho, Teck-Hua & Chong, Juin-Kuan, 2002. "Sophisticated Experience-Weighted Attraction Learning and Strategic Teaching in Repeated Games," Journal of Economic Theory, Elsevier, vol. 104(1), pages 137-188, May.
    40. Ronald Harstad, 2000. "Dominant Strategy Adoption and Bidders' Experience with Pricing Rules," Experimental Economics, Springer;Economic Science Association, vol. 3(3), pages 261-280, December.
    41. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. R. M. Harstad & R. Selten., 2014. "Bounded-Rationality Models: Tasks to Become Intellectually Competitive," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
    2. Terence C. Burnham, 2016. "Economics and evolutionary mismatch: humans in novel settings do not maximize," Journal of Bioeconomics, Springer, vol. 18(3), pages 195-209, October.
    3. Bogliacino, Francesco & Codagnone, Cristiano, 2017. "Microfoundations, Behaviour, and Evolution: Evidence from Experiments," MPRA Paper 82479, University Library of Munich, Germany.
    4. Paul Ormerod, 2016. "Picking Up the Gauntlet: Richard Thaler's Defence of Behavioural Economics," Economic Affairs, Wiley Blackwell, vol. 36(1), pages 91-101, February.
    5. repec:spr:jogath:v:46:y:2017:i:3:d:10.1007_s00182-016-0547-5 is not listed on IDEAS
    6. Jean-François Laslier & Bernard Walliser, 2015. "Stubborn learning," Theory and Decision, Springer, vol. 79(1), pages 51-93, July.
    7. repec:spr:etbull:v:5:y:2017:i:2:d:10.1007_s40505-016-0110-3 is not listed on IDEAS
    8. Jørgen-Vitting Andersen & Philippe de Peretti, 2018. "New method to detect convergence in simple multi-period market games with infinite large strategy spaces," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01960900, HAL.
    9. Fabrizio Germano & Peio Zuazo-Garin, 2017. "Bounded rationality and correlated equilibria," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(3), pages 595-629, August.
    10. Nayoung Kim & Sung-Ha Hwang, 2015. "Evolution of Altruistic Preferences among Boundedly Rational Agent," Korean Economic Review, Korean Economic Association, vol. 31, pages 239-266.
    11. Jørgen Vitting Andersen & Philippe de Peretti, 2018. "New method to detect convergence in simple multi-period market games with infinite large strategy spaces," Documents de travail du Centre d'Economie de la Sorbonne 18038, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    12. Virginia Cecchini Manara & Lorenzo Sacconi, 2019. "Institutions, Frames, and Social Contract Reasoning," Econometica Working Papers wp71, Econometica.
    13. Ockenfels, Axel & Selten, Reinhard, 2014. "Impulse balance in the newsvendor game," Games and Economic Behavior, Elsevier, vol. 86(C), pages 237-247.
    14. May, Daniel E., 2015. "Behavioural Drivers of Business Competitiveness in Agriculture," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 16(2), pages 1-22.
    15. Paul Pezanis-Christou & Hang Wu, 2017. "A Naïve Approach to Bidding," School of Economics Working Papers 2017-03, University of Adelaide, School of Economics.
    16. Chong, Juin-Kuan & Ho, Teck-Hua & Camerer, Colin, 2016. "A generalized cognitive hierarchy model of games," Games and Economic Behavior, Elsevier, vol. 99(C), pages 257-274.
    17. Paul Pezanis-Christou & Hang Wu, 2018. "A non-game-theoretic approach to bidding in first-price and all-pay auctions," School of Economics Working Papers 2018-12, University of Adelaide, School of Economics.
    18. Marina S. Sandomirskaia, 2015. "Price-Quantity Competition of Farsighted Firms: Toughness vs. Collusion," HSE Working papers WP BRP 93/EC/2015, National Research University Higher School of Economics.

    More about this item

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nos:voprec:2014-05-2. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sergei Parinov). General contact details of provider: http://www.vopreco.ru/eng/year.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.