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Bounded rationality in differential games

Author

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  • Beckmann, Klaus B.

    (Helmut Schmidt University, Hamburg)

Abstract

The present paper proposes a myopic, boundedly rational heuristic for individual decision-making in differential game settings. I demonstrate that this type of behaviour converges to Nash equilibrium in infinitely repeated stage games without a state variable if the stage game is strategically symmetric. Two examples are used to illustrate the application of the heuristic in differential games.

Suggested Citation

  • Beckmann, Klaus B., 2017. "Bounded rationality in differential games," Working Paper 178/2017, Helmut Schmidt University, Hamburg.
    • Handle: RePEc:ris:vhsuwp:2017_178
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    References listed on IDEAS

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    18. Afflatet, Nicolas, 2016. "Deficit Policy within the Framework of the Stability and Growth Pact - Empirical Results and Lessons for the Fiscal Compact," Working Paper 168/2016, Helmut Schmidt University, Hamburg.
    19. Beckmann, Klaus & Gattke, Susan & Reimer, Lennart, 2015. "The Boulding-Richardson Model Revisited," Working Paper 159/2015, Helmut Schmidt University, Hamburg.
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    21. Afflatet, Nicolas, 2015. "Public Debt and Borrowing. Are Governments Disciplined by Financial Markets?," Working Paper 156/2015, Helmut Schmidt University, Hamburg.
    22. Beckmann, Klaus & Gattke, Susan & Lechner, Anja & Reimer, Lennart, 2016. "A critique of the Richardson equations," Working Paper 162/2016, Helmut Schmidt University, Hamburg.
    23. Herzer, Dierk & Nagel, Korbinian, 2017. "The effects of adult and non-adult mortality on long-run economic development: Evidence from a heterogeneous dynamic and cross-sectionally dependent panel of countries between 1800 and 2010," Working Paper 177/2017, Helmut Schmidt University, Hamburg.
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    25. Luik, Marc-André, 2016. "Child Health, Human Capital and Adult Financial Behavior," Working Paper 174/2016, Helmut Schmidt University, Hamburg.
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    Cited by:

    1. Dewenter, Ralf & Löw, Franziska, 2022. "Endogenous Network Effects," Working Paper 194/2022, Helmut Schmidt University, Hamburg.
    2. Bantle, Melissa & Muijs, Matthias, 2018. "A new price test in geographic market definition – an application to german retail gasoline market," Working Paper 180/2018, Helmut Schmidt University, Hamburg.

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    More about this item

    Keywords

    differential games; simulation; bounded rationality;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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