Satisficing Equilibrium

Bary S. R. Pradelski and Bassel Tarbush

Papers from arXiv.org

Abstract: We propose a solution concept in which each agent $i$ does not necessarily optimize but selects one of their top $k_i$ actions. Our concept accounts for heterogeneous agents' bounded rationality. We show that there exist satisficing equilibria in which all but one agent best-respond and the remaining agent plays at least a second-best action in asymptotically almost all games. Additionally, we define a class of approximate potential games in which satisficing equilibria are guaranteed to exist. Turning to foundations, we characterize satisficing equilibrium via decision theoretic axioms and we show that a simple dynamic converges to satisficing equilibria in almost all large games. Finally, we apply the satisficing lens to two classic games from the literature.

Date: 2024-09, Revised 2025-02
New Economics Papers: this item is included in nep-des, nep-gth and nep-mic
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