Bounded rationality and small worlds
We consider conditions under which the representation of the world available to a boundedly rational decision-maker, whose awareness in- creases over time, constitutes an adequate `small world' (in the sense of Savage 1954) for the assessment of a given decision. Equivalently, we consider whether boundedly rational decision-makers who gradu- ally become aware of all relevant contingencies, can pursue a strategy that is sequentially consistent. We derive conditions on beliefs and preferences that yield a separation between the set of propositions of which the boundedly rational decision-maker is aware and those of which she is unaware and show that these conditions are sufficient to ensure sequential consistency.
|Date of creation:||Jun 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Colin Clark Building, no 39, St. Lucia, Qld. 4072|
Phone: +61 7 3365 6601
Fax: +61 7 3365 6601
Web page: http://www.uq.edu.au/rsmg/index.htm
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- HEIFETZ, Aviad & MEIER, Martin & SCHIPPER, Burkhard C., 2004.
CORE Discussion Papers
2004059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C., 2005. "Interactive Unawareness," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 52, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
When requesting a correction, please mention this item's handle: RePEc:rsm:riskun:r08_2. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Adamson)
If references are entirely missing, you can add them using this form.