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The Behavioral Firm and Its Internal Game: Evolutionary Dynamics of Decision Making


  • F. de Vries


In this paper the firm is analyzed and modeled as a set of different subcoalitions (agents) each with their own objectives. It examines how the goals can be conflicting and in turn how this influences the payoff structure of the subcoalitions given that they follow 'simple' decision rules, i.e. rules of thumb. This implies that the subcoalitions act in aboundedly rational way. To see how these decision making procedures evolve we make use of an (evolutionary) dynamic game theoretical framework. Consequently, the main aim is to address the issue of modeling the dynamic and adaptive nature of the subcoalitions.

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  • F. de Vries, 1999. "The Behavioral Firm and Its Internal Game: Evolutionary Dynamics of Decision Making," Working Papers ir99036, International Institute for Applied Systems Analysis.
  • Handle: RePEc:wop:iasawp:ir99036

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    References listed on IDEAS

    1. Itzhak Gilboa & David Schmeidler, 1993. "Case-Based Consumer Theory," Discussion Papers 1025, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Gilboa, Itzhak & Schmeidler, David, 1996. "Case-Based Optimization," Games and Economic Behavior, Elsevier, vol. 15(1), pages 1-26, July.
    3. Borgers, Tilman & Sarin, Rajiv, 1997. "Learning Through Reinforcement and Replicator Dynamics," Journal of Economic Theory, Elsevier, vol. 77(1), pages 1-14, November.
    4. Y.M. Ermoliev & S.D. Flam, 1997. "Learning in Potential Games," Working Papers ir97022, International Institute for Applied Systems Analysis.
    5. Itzhak Gilboa & David Schmeidler, 1995. "Case-Based Decision Theory," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 605-639.
    6. Bendor, J. & Mookherjee, D. & Ray, D., 1994. "Aspirations, adaptive learning and cooperation in repeated games," Discussion Paper 1994-42, Tilburg University, Center for Economic Research.
    7. A.V. Kryazhimskii & A.M. Tarasyev, 1998. "Equilibrium and Guaranteeing Solutions in Evolutionary Nonzero Sum Games," Working Papers ir98003, International Institute for Applied Systems Analysis.
    8. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
    9. Karandikar, Rajeeva & Mookherjee, Dilip & Ray, Debraj & Vega-Redondo, Fernando, 1998. "Evolving Aspirations and Cooperation," Journal of Economic Theory, Elsevier, vol. 80(2), pages 292-331, June.
    10. Borgers, Tilman & Sarin, Rajiv, 2000. "Naive Reinforcement Learning with Endogenous Aspirations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 921-950, November.
    11. A.V. Kryazhimskii & A. Nentjes & S. Shibayev & A.M. Tarasyev, 1998. "Searching Market Equilibria under Uncertain Utilities," Working Papers ir98007, International Institute for Applied Systems Analysis.
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