Doubts and equilibria

Antonio Cabrales () and José Ramón Uriarte ()

Economics Working Papers from Universidad Carlos III, Departamento de Economía

Abstract: In real life strategic interactions decision-makers are likely to entertain doubts about the degree of optimality of their play. To capture this feature of real choice-making, we present here a model based on the doubts felt by an agent about how well is playing a game. The doubts are coupled with (and mutually reinforced by) imperfect discrimination capacity, which we model here by means of similarity relations. We assume that each agent builds procedural preferences defined on the space of expected payoffsstrategy frequencies attached to his current strategy. These preferences, together with an adaptive learning process lead to doubt-based selection dynamic systems. We introduce the concepts of Mixed Strategy Doubt Equilibria, Mixed Strategy Doubt-Full Equilibria and Mixed Strategy Doubtless Equilibria and show the theoretical and the empirical relevance of these concepts

Keywords: Doubts; Bounded rationality; Evolutionary dynamics; Decision theory (search for similar items in EconPapers)
JEL-codes: C72 C73 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-gth, nep-hpe and nep-upt
Date: 2008-02
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Working Paper: Doubts and Equilibria (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:cte:werepe:we080905

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