Paying Attention to Payoffs in Analogy-Based Learning
Topi Miettinen ()
No 7, SITE Working Paper Series from Stockholm School of Economics, Stockholm Institute of Transition Economics
This paper introduces the payoff-confirming analogy-based expectation equilibrium (PCABEE) as a way to refine the set of analogy-based equilibria and the associated admissible analogy partitions. In addition to the actions of others, own payoff history provides information about others’ strategies but, yet, non-Bayesian Nash equilibria may exist both with an incorrect and a correct prior. We provide general conditions when this happens. Two stylized employer-employee interactions, one with a correct and one with an incorrect prior, are provided illustrating how PCABEE can be used to analyze robust stereotypes and how incorrect such stereotypes may lead to discrimination.
Keywords: analogy expectations; bounded rationality; curse; learning; discrimination; stereotypes (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Pages: 31 pages
New Economics Papers: this item is included in nep-cba, nep-cbe and nep-gth
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Journal Article: Paying attention to payoffs in analogy-based learning (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:hasite:0007
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