Game Theory and Strategic Complexity
The subject of this entry is at the intersection of economics and computer science and deals with the use of measures of complexity obtained from the study of finite automata to help select among multiple equilibria and other outcomes appearing in game-theoretic models of bargaining, markets, and repeated interactions. The importance of the topic lies in the ability of concepts that employ bounds on available resources to generate more refined predictions of individual behavior in markets.
This entry is concerned with the concept of strategic complexity and its use in game theory. There are many different meanings associated with the word “complexity,” as the variety of topics discussed in this volume makes clear. In this entry, we shall adopt a somewhat narrow view, confining ourselves to notions that measure, in some way, constraints on the ability of economic agents to behave with full rationality in their interactions with other agents in dynamic...
KeywordsNash Equilibrium Equilibrium Strategy Competitive Equilibrium Finite Automaton Repeated Game
We wish to thank an anonymous referee and Jihong Lee for valuable comments that improved the exposition of this entry. We would also like to thank St. John’s College, Cambridge, and the Pennsylvania State University for funding Dr. Chatterjee’s stay in Cambridge at the time this entry was written.
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