Bounded rationality: static versus dynamic approaches

Suren Basov

Economic Theory, 2005, vol. 25, issue 4, 885 pages

Abstract: Two kinds of theories of boundedly rational behavior are possible. Static theories focus on stationary behavior and do not include any explicit mechanism for temporal change. Dynamic theories, on the other hand, explicitly model the fine-grain adjustments made by the subjects in response to their recent experiences. The main contribution of this paper is to argue that the restrictions usually imposed on the distribution of choices in the static approach are generically not supported by a dynamic adjustment mechanism. The genericity here is understood both in the measure theoretic and in the topological sense. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Bounded rationality; Dynamic adjustment; Genericity. (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (8)

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Working Paper: Bounded Rationality:Static Versus Dynamic Approaches (2003)
Working Paper: Bounded Rationality: Static versus Dynamic Approach (2002)
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DOI: 10.1007/s00199-004-0484-6

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