Incentive constraints in games with bounded memory
In this paper I analyze a repeated coordination game between a bounded memory player and a fully rational player. A bounded memory player is a player who is subject to imperfect recall, but, conditional on this constraint, acts optimally every point in time given her beliefs over the actual history of the game. I show that the results contrast with the ones in the finite automata literature. In particular, a result denoted the “tyranny of the weak” in Gilboa and Samet (Games Econ Behav 1: 213–221, 1989 ) is no longer present here. Copyright Springer-Verlag Berlin Heidelberg 2014
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Volume (Year): 43 (2014)
Issue (Month): 1 (February)
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References listed on IDEAS
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- Gilboa, Itzhak & Samet, Dov, 1989.
"Bounded versus unbounded rationality: The tyranny of the weak,"
Games and Economic Behavior,
Elsevier, vol. 1(3), pages 213-221, September.
- Itzhak Gilboa & Dov Samet, 1989. "Bounded Versus Unbounded Rationality: The Tyranny of the Weak," Post-Print hal-00753239, HAL.
- Lipman, Barton L., 1997. "More Absentmindedness," Games and Economic Behavior, Elsevier, vol. 20(1), pages 97-101, July.
- Rubinstein, Ariel, 1986. "Finite automata play the repeated prisoner's dilemma," Journal of Economic Theory, Elsevier, vol. 39(1), pages 83-96, June.
- Ariel Rubinstein, 1997. "Finite automata play the repeated prisioners dilemma," Levine's Working Paper Archive 1639, David K. Levine.
- Aumann, Robert J., 1997. "Rationality and Bounded Rationality," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 2-14, October.
- Aumann, Robert J. & Hart, Sergiu & Perry, Motty, 1997. "The Absent-Minded Driver," Games and Economic Behavior, Elsevier, vol. 20(1), pages 102-116, July.
- Joel Sobel, 1985. "A Theory of Credibility," Review of Economic Studies, Oxford University Press, vol. 52(4), pages 557-573. Full references (including those not matched with items on IDEAS)
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