Finite Rationality and Interpersonal Complexity in Repeated Games
Finite complexity strategies suffice for approximating all subgame perfect equ ilibrium payoffs of repeated games. Generically, at such equilibria, no player's complexity exceeds the product of his opponents' complexi ties. Also, no player's memory exceeds the maximal memory of his oppo nents. The complexity of a strategy is defined here to equal the numb er of distinct strategies it induces in the various subgames. It equa ls the size (number of states) of the smallest automaton describing i t and also the number of states of the smallest information system ne eded for the implementation of the strategy. Copyright 1988 by The Econometric Society.
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| Date of creation: | Apr 1986 |
| Handle: | RePEc:nwu:cmsems:679 |
| Contact details of provider: | Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014 Phone: 847/491-3527 Fax: 847/491-2530 Web page: http://www.kellogg.northwestern.edu/research/math/ Email: More information through EDIRC
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- James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 1-12.
- Stanford, William G., 1986. "Subgame perfect reaction function equilibria in discounted duopoly supergames are trivial," Journal of Economic Theory, Elsevier, vol. 39(1), pages 226-232, June.
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- Fudenberg, Drew & Levine, David, 1983.
"Subgame-perfect equilibria of finite- and infinite-horizon games,"
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- Smale, Steve, 1980. "The Prisoner's Dilemma and Dynamical Systems Associated to Non-Cooperative Games," Econometrica, Econometric Society, vol. 48(7), pages 1617-1634, November.
- Radner, Roy, 1980. "Collusive behavior in noncooperative epsilon-equilibria of oligopolies with long but finite lives," Journal of Economic Theory, Elsevier, vol. 22(2), pages 136-154, April.
- Futia, Carl, 1977. "The complexity of economic decision rules," Journal of Mathematical Economics, Elsevier, vol. 4(3), pages 289-299, December.
- Stanford, William G., 1986. "On continuous reaction function equilibria in duopoly supergames with mean payoffs," Journal of Economic Theory, Elsevier, vol. 39(1), pages 233-250, June.
- Kalai, Ehud & Samet, Dov & Stanford, William, 1988. "A Note on Reactive Equilibria in the Discounted Prisoner's Dilemma and Associated Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 17(3), pages 177-186. Full references (including those not matched with items on IDEAS)
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