Bounded Versus Unbounded Rationality: The Tyranny of the Weak
We examine the case of a two-person repeated game played by a boundedly rational player versus an unboundedly rational opponent. The former is restricted to strategies which are implementable by connected finite automata. It is shown that the "rational" player has a dominant strategy, and that in some cases the "weaker" (boundedly rational) player may exploit this fact to "blackmail" him. It is also shown that for a repeated zero-sum game, the rational player has a strategy which drives the automaton player's limit payoff down to his security (maxmin) level, even if he may choose any finite automaton.
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|Date of creation:||1989|
|Publication status:||Published in Games and Economic Behavior, Elsevier, 1989, vol. 1, pp. 213-221. <10.1016/0899-8256(89)90009-2>|
|Note:||View the original document on HAL open archive server: https://hal-hec.archives-ouvertes.fr/hal-00753239|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|