Equilibrium Concepts for Boundedly Rational Behavior in Games
The paper extends the Nash equilibrium concept to account for arbitrary behavioral heuristics. Players are allowed not only to choose strategies, but also to select behavioral rules how to choose strategies. It is argued that behavioral profiles are in equilibrium if no player can benefit from deviating to another strategy, another behavioral rule or its parametrization. It turns out that in general payoff maximization is not a dominant behavioral rule. Furthermore it is shown that heterogeneous behavior may endogeneously evolve even in case of a unique symmetric Nash equilibrium.
|Date of creation:||01 May 2001|
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