Algorithmic rationality: Game theory with costly computation

Joseph Halpern () and Rafael Pass

Journal of Economic Theory, 2015, vol. 156, issue C, 246-268

Abstract: We develop a general game-theoretic framework for reasoning about strategic agents performing possibly costly computation. In this framework, many traditional game-theoretic results (such as the existence of a Nash equilibrium) no longer hold. Nevertheless, we can use the framework to provide psychologically appealing explanations of observed behavior in well-studied games (such as finitely repeated prisoner's dilemma and rock–paper–scissors). Furthermore, we provide natural conditions on games sufficient to guarantee that equilibria exist.

Keywords: Costly computation; Bounded rationality (search for similar items in EconPapers)
JEL-codes: D80 D83 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:156:y:2015:i:c:p:246-268

DOI: 10.1016/j.jet.2014.04.007

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