What Information Theory Says About Bounded Rational Best Response

David H. Wolpert ()
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David H. Wolpert: NASA Ames Research Center

A chapter in The Complex Networks of Economic Interactions, 2006, pp 293-306 from Springer

Abstract: Summary Probability Collectives (PC) provides the information-theoretic extension of conventional full-rationality game theory to bounded rational games. Here an explicit solution to the equations giving the bounded rationality equilibrium of a game is presented. Then PC is used to investigate games in which the players use bounded rational best-response strategies. Next it is shown that in the continuumtime limit, bounded rational best response games result in a variant of the replicator dynamics of evolutionary game theory. It is then shown that for team (shared-payoff) games, this variant of replicator dynamics is identical to Newton-Raphson iterative optimization of the shared utility function.

Keywords: Nash Equilibrium; Game Theory; Mixed Strategy; Pure Strategy; Boltzmann Distribution (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-540-28727-8_20

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DOI: 10.1007/3-540-28727-2_20

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