Modeling Bounded Rationality / Edition 1

Modeling Bounded Rationality / Edition 1

2.0 2
by Ariel Rubinstein
     
 

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ISBN-10: 0262681005

ISBN-13: 9780262681001

Pub. Date: 12/26/1997

Publisher: MIT Press

The notion of bounded rationality was initiated in the 1950s by Herbert
Simon; only recently has it influenced mainstream economics. In this book, Ariel
Rubinstein defines models of bounded rationality as those in which elements of the process of choice are explicitly embedded. The book focuses on the challenges of modeling bounded rationality, rather than

Overview

The notion of bounded rationality was initiated in the 1950s by Herbert
Simon; only recently has it influenced mainstream economics. In this book, Ariel
Rubinstein defines models of bounded rationality as those in which elements of the process of choice are explicitly embedded. The book focuses on the challenges of modeling bounded rationality, rather than on substantial economic implications.

In the first part of the book, the author considers the modeling of choice. After discussing some psychological findings, he proceeds to the modeling of procedural rationality, knowledge, memory, the choice of what to know, and group decisions.In the second part, he discusses the fundamental difficulties of modeling bounded rationality in games. He begins with the modeling of a game with procedural rational players and then surveys repeated games with complexity considerations. He ends with a discussion of computability constraints in games. The final chapter includes a critique by Herbert Simon of the author's methodology and the author's response.

The Zeuthen
Lecture Book series is sponsored by the Institute of Economics at the University of
Copenhagen.

Product Details

ISBN-13:
9780262681001
Publisher:
MIT Press
Publication date:
12/26/1997
Series:
Zeuthen Lectures
Edition description:
New Edition
Pages:
220
Product dimensions:
5.90(w) x 8.90(h) x 0.40(d)
Age Range:
18 Years

Table of Contents

Series Foreword
Preface
Introduction
1 "Modeling" and "Bounded Rationality"
2 The Aim of this Book
3 The State of the Art
4 A Personal Note
5 Bibliographic Notes
1 Bounded Rationality in Choice
1.1 The "Rational Man"
1.2 The Traditional Economist's Position
1.3 The Attack on the Traditional Approach
1.4 EXperimental Evidence
1.5 Comments
1.6 Bibliographic Notes
1.7 Projects
2 Modeling Procedural Decision Making
2.1 Motivation
2.2 Preparing the Tools: Similarity Relations
2.3 A Procedure of Choice Between Vectors
2.4 Analysis
2.5 CaseBased Theory
2.6 Bibliographic Notes
2.7 Projects
3 Modeling Knowledge
3.1 Knowledge and Bounded Rationality
3.2 Information Structure
3.3 The SetTheoretical Definition of Knowledge
3.4 Kripke's Model
3.5 The Impact of the Timing of Decisions and Having More
Information
3.6 On the Possibility of Speculative Trade
3.7 Bibliographic Notes
3.8 Projects
4 Modeling Limited Memory
4.1 Imperfect Recall
4.2 An EXtensive Decision Making Model with Imperfect Information
4.3 Perfect and Imperfect Recall
4.4 Time Consistency
4.5 The Role of Randomization
4.6 The Multiselves Approach
4.7 On the Problematics of Using the Model
4.8 Bibliographic Notes
4.9 Projects
5 Choosing What to Know
5.1 Optimal Information Structures
5.2 What Is "High" and What Is "Low"?
5.3 Manipulating Informational Restrictions
5.4 Perceptrons
5.5 Bibliographic Notes
5.6 Projects
6 Modeling CompleXity in Group
Decisions
6.1 Introduction
6.2 The Model of a Team
6.3 Processing Information
6.4 Aggregating Preferences
6.5 BibliographicNotes
6.6 Projects
7 Modeling Bounded Rationality in
Games
7.1 Introduction
7.2 Interaction Between Luce Players
7.3 A Game with Procedural Rational Players
7.4 Limited Foresight in EXtensive Games
7.5 Bibliographic Notes
7.6 Projects
8 CompleXity Considerations in Repeated
Games
8.1 Introduction
8.2 The Model of Repeated Games: A Brief Review
8.3 Strategies as Machines in Infinitely Repeated Games
8.4 CompleXity Considerations in Repeated Games
8.5 The Structure of Machine Game Equilibria
8.6 Repeated EXtensive Games
8.7 Concluding Remarks
8.8 Bibliographic Notes
8.9 Projects
9 Attempts to Resolve the Finite Horizon
ParadoXes
9.1 Motivation
9.2 Implementation of Strategies by Machines
9.3 Counting Is Costly
9.4 Bounded Capability to Count
9.5 Machines Also Send Messages
9.6 The [epsilon]Equilibrium Approach: A Deviation Is Costly
9.7 Conclusion
9.8 Bibliographic Notes
9.9 Projects
10 Computability Constraints in
Games
10.1 Introduction
10.2 Informal Results on Computability
10.3 Is There a Rational Player?
10.4 Turing Machine Game
10.5 Bibliographic Notes
10.6 Projects
11 Final Thoughts
11.1 Simon's Critique
11.2 Response
References
IndeX

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