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A bounded-rationality approach to the study of noncooperative games

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Abstract

A family of solutions for finite noncooperative games is introduced in which players are not confined to use best responses exclusively. Instead, the definition requires that the probability of use of a strategy must be a monotone-nondecreasing function of its expected payoff. For the two-person case, some results characterizing behavior at such solutions are given and some examples are examined.

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Authors and Affiliations

  1. Department of Economics, Boston University, 02215, Boston, MA, USA

    R. W. Rosenthal

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  1. R. W. Rosenthal
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Additional information

This material is based upon work supported by the National Science Foundation under Grant No. SES86-03550 at SUNY, Stony Brook. I am grateful to Abraham Neyman for helpful suggestions, to Bryan Boudreau and Doug Zona for excellent programming assistance, to a referee for pointing out errors in an earlier version, and to Eric van Damme for pointing out the close relationship between his control-cost theory and the theory developed here.

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Rosenthal, R.W. A bounded-rationality approach to the study of noncooperative games. Int J Game Theory 18, 273–292 (1989). https://doi.org/10.1007/BF01254292

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  • DOI: https://doi.org/10.1007/BF01254292

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