Lying for the Greater Good: Bounded Rationality in a Team
Oktay Sürücü ()
The International Journal of Economic Behavior - IJEB, 2014, vol. 4, issue 1, 151-163
This paper is concerned with the interaction between fully and boundedly rational agents in situations where their interests are perfectly aligned. The cognitive limitations of the boundedly rational agent do not allow him to fully understand the market conditions and lead him to take non-optimal decisions in some situations. Using categorization to model bounded rationality, we show that the fully rational agent can nudge, i.e., he can manipulate the information he sends and decrease the expected loss caused by the boundedly rational agent. Assuming different types for the boundedly rational agent, who differ only in the categories used, we show that the fully rational agent may learn the type of the boundedly rational agent along their interaction. Using this additional information, the outcome can be improved and the amount of manipulated information can be decreased. Furthermore, as the length of the interaction increases the probability that the fully rational agent learns the type of the boundedly rational agent grows.
Keywords: bounded rationality; categorization; nudging; learning. (search for similar items in EconPapers)
JEL-codes: C92 D21 D22 D23 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
http://ijeb.faa.ro/en/article/Lying-for-the-Greate ... y-in-a-Team~490.html (text/html)
Working Paper: Lying for the Greater Good: Bounded Rationality in a Team (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:but:ijebfa:v:4:y:2014:i:1:p:151-163
Access Statistics for this article
The International Journal of Economic Behavior - IJEB is currently edited by Fabio Musso
More articles in The International Journal of Economic Behavior - IJEB from Faculty of Business and Administration, University of Bucharest Contact information at EDIRC.
Series data maintained by Cosmin Catalin Olteanu ().