International Journal of Game Theory

, Volume 37, Issue 3, pp 333–352

Learning to be prepared

Open Access
Original Paper

DOI: 10.1007/s00182-008-0121-x

Cite this article as:
Kets, W. & Voorneveld, M. Int J Game Theory (2008) 37: 333. doi:10.1007/s00182-008-0121-x

Abstract

Behavioral economics provides several motivations for the common observation that agents appear somewhat unwilling to deviate from recent choices. More recent choices can be more salient than other choices, or more readily available in the agent’s mind. Alternatively, agents may have formed habits, or use rules of thumb. This paper provides discrete-time adjustment processes for strategic games in which players display such a bias towards recent choices. In addition, players choose best replies to beliefs supported by observed play in the recent past. We characterize the limit behavior of these processes by showing that they eventually settle down in minimal prep sets (Voorneveld in Games Econ Behav 48:403–414, 2004).

Keywords

Adjustment Learning Minimal prep sets Availability bias Salience Rules of thumb 

JEL Classification

C72 D83 
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Copyright information

© The Author(s) 2008

Authors and Affiliations

  1. 1.Department of Econometrics and Operations ResearchTilburg UniversityTilburgThe Netherlands
  2. 2.Department of EconomicsStockholm School of EconomicsStockholmSweden

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