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Learning to be prepared

  • Kets, Willemien

    (Department of Econometrics and Operations Research)

  • Voorneveld, Mark

    ()

    (Dept. of Economics, Stockholm School of Economics)

Behavioral economics provides several motivations for the common observation that agents appear somewhat unwilling to deviate from recent choices: salience, inertia, the formation of habits, the use of rules of thumb, or the locking in on certain modes of behavior due to learning by doing. This paper provides discrete-time adjustment processes for strategic games in which players display precisely such a bias towards recent choices. In addition, players choose best replies to beliefs supported by observed play in the recent past, in line with much of the literature on learning. These processes eventually settle down in the minimal prep sets of Voorneveld (2004, 2005).

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File URL: http://swopec.hhs.se/hastef/papers/hastef0590.pdf
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Paper provided by Stockholm School of Economics in its series SSE/EFI Working Paper Series in Economics and Finance with number 590.

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Length: 27 pages
Date of creation: 07 Mar 2005
Date of revision:
Handle: RePEc:hhs:hastef:0590
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  1. Fudenberg, Drew & Levine, David, 1998. "Learning in games," European Economic Review, Elsevier, vol. 42(3-5), pages 631-639, May.
  2. Tercieux, O.R.C. & Voorneveld, M., 2005. "The Cutting Power of Preparation," Discussion Paper 2005-94, Tilburg University, Center for Economic Research.
  3. Ellison, Glenn & Fudenberg, Drew, 1992. "Rules of Thumb for Social Learning," IDEI Working Papers 17, Institut d'Économie Industrielle (IDEI), Toulouse.
  4. Grossman, Sanford J & Kihlstrom, Richard E & Mirman, Leonard J, 1977. "A Bayesian Approach to the Production of Information and Learning by Doing," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 533-47, October.
  5. Joosten Reinoud & Peters Hans & Thuijsman Frank, 1995. "Unlearning by Not Doing: Repeated Games with Vanishing Actions," Games and Economic Behavior, Elsevier, vol. 9(1), pages 1-7, April.
  6. Brigitte C. Madrian & Dennis F. Shea, 2001. "THE POWER OF SUGGESTION: INERTIA IN 401(k) PARTICIPATION AND SAVINGS BEHAVIOR," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1149-1187, November.
  7. Ehud Kalai & Dov Samet, 1982. "Persistent Equilibria in Strategic Games," Discussion Papers 515, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Voorneveld, Mark, 2005. "Persistent retracts and preparation," Games and Economic Behavior, Elsevier, vol. 51(1), pages 228-232, April.
  9. Mark Voorneveld & Willemien Kets & Henk Norde, 2005. "An axiomatization of minimal curb sets," International Journal of Game Theory, Springer, vol. 33(4), pages 479-490, November.
  10. Basu, K. & Weibull, J., 1990. "Strategy Subsets Closed Under Rational Behavior," Papers 62, Princeton, Woodrow Wilson School - Discussion Paper.
  11. Sugden, Robert, 1995. "A Theory of Focal Points," Economic Journal, Royal Economic Society, vol. 105(430), pages 533-50, May.
  12. Tercieux, Olivier & Voorneveld, Mark, 2005. "The cutting power of preparation," SSE/EFI Working Paper Series in Economics and Finance 583, Stockholm School of Economics.
  13. Vega-Redondo, Fernando, 1993. "Simple and Inertial Behavior: An Optimizing Decision Model with Imprecise Perceptions," Economic Theory, Springer, vol. 3(1), pages 87-98, January.
  14. 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.
  15. Vega-Redondo, Fernando, 1995. "The Dynamics and Revealed Preference of Status-Quo Optimality," Economic Theory, Springer, vol. 6(2), pages 263-82, July.
  16. Voorneveld, Mark, 2004. "Preparation," Games and Economic Behavior, Elsevier, vol. 48(2), pages 403-414, August.
  17. Crawford, Vincent P & Haller, Hans, 1990. "Learning How to Cooperate: Optimal Play in Repeated Coordination Games," Econometrica, Econometric Society, vol. 58(3), pages 571-95, May.
  18. Hurkens Sjaak, 1995. "Learning by Forgetful Players," Games and Economic Behavior, Elsevier, vol. 11(2), pages 304-329, November.
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