Bounded Versus Unbounded Rationality: The Tyranny of the Weak

Itzhak Gilboa and Dov Samet

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Abstract: We examine the case of a two-person repeated game played by a boundedly rational player versus an unboundedly rational opponent. The former is restricted to strategies which are implementable by connected finite automata. It is shown that the "rational" player has a dominant strategy, and that in some cases the "weaker" (boundedly rational) player may exploit this fact to "blackmail" him. It is also shown that for a repeated zero-sum game, the rational player has a strategy which drives the automaton player's limit payoff down to his security (maxmin) level, even if he may choose any finite automaton.

Keywords: Bounded; Unbounded Rationality; Tyranny of the Weak (search for similar items in EconPapers)
Date: 1989
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Published in Games and Economic Behavior, 1989, vol. 1, pp. 213-221. ⟨10.1016/0899-8256(89)90009-2⟩

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Journal Article: Bounded versus unbounded rationality: The tyranny of the weak (1989)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00753239

DOI: 10.1016/0899-8256(89)90009-2

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