Learning to be prepared |
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Authors: | Willemien Kets Mark Voorneveld |
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Affiliation: | (1) Department of Econometrics and Operations Research, Tilburg University, Tilburg, The Netherlands;(2) Department of Economics, Stockholm School of Economics, Box 6501, 113 83 Stockholm, Sweden |
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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). |
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Keywords: | Adjustment Learning Minimal prep sets Availability bias Salience Rules of thumb |
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