Analogies and theories: The role of simplicity and the emergence of norms

Gabrielle Gayer and Itzhak Gilboa

Games and Economic Behavior, 2014, vol. 83, issue C, 267-283

Abstract: We consider the dynamics of reasoning by general rules (theories) and by specific cases (analogies). When an agent faces an exogenous process, we show that, under mild conditions, if reality happens to be simple, the agent will converge to adopt a theory and discard analogical thinking. If, however, reality is complex, analogical reasoning is unlikely to disappear. By contrast, when the agent is a player in a large population coordination game, and the process is generated by all playersʼ predictions, convergence to a theory is much more likely. This may explain how a large population of players selects an equilibrium in such a game, and how social norms emerge. Mixed cases, involving noisy endogenous processes are likely to give rise to complex dynamics of reasoning, switching between theories and analogies.

Keywords: Case-based reasoning; Rule-based reasoning; Model selection; Social norms; Equilibrium selection (search for similar items in EconPapers)
JEL-codes: C7 D8 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Analogies and Theories: The Role of Simplicity and the Emergence of Norms (2012)
Working Paper: Analogies and Theories: The Role of Simplicity and the Emergence of Norms (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:83:y:2014:i:c:p:267-283

DOI: 10.1016/j.geb.2013.11.003

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