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Rule Rationality

Author

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  • Yuval Heller
  • Eyal Winter

Abstract

We study the strategic advantages of following rules of thumb that bundle different games together (called rule rationality) when this may be observed by one's opponent. We present a model in which the strategic environment determines which kind of rule rationality is adopted by the players. We apply the model to characterize the induced rules and outcomes in various interesting environments. Finally, we show the close relations between act rationality and “Stackelberg stability” (no player can earn from playing first).

Suggested Citation

  • Yuval Heller & Eyal Winter, 2016. "Rule Rationality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(3), pages 997-1026, August.
    • Handle: RePEc:wly:iecrev:v:57:y:2016:i:3:p:997-1026
    DOI: 10.1111/iere.12183
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    Cited by:

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    3. Robert Gibbons & Marco LiCalzi & Massimo Warglien, 2017. "What situation is this? Coarse cognition and behavior over a space of games," Working Papers 09, Venice School of Management - Department of Management, Università Ca' Foscari Venezia.
    4. Daskalova, Vessela & Vriend, Nicolaas J., 2021. "Learning frames," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 78-96.
    5. Heller, Yuval & Sturrock, David, 2020. "Promises and endogenous reneging costs," Journal of Economic Theory, Elsevier, vol. 187(C).
    6. Daskalova, Vessela & Vriend, Nicolaas J., 2020. "Categorization and coordination," European Economic Review, Elsevier, vol. 129(C).
    7. Heller, Yuval & Sturrock, David, 2017. "Promises and Endogenous Reneging Costs," MPRA Paper 78803, University Library of Munich, Germany.
    8. Daskalova, Vessela & Vriend, Nicolaas J., 2020. "Categorization and coordination," European Economic Review, Elsevier, vol. 129(C).

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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