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Learning to be prepared

Willemien Kets and Mark Voorneveld

No 590, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: Behavioral economics provides several motivations for the common observation that agents appear somewhat unwilling to deviate from recent choices: salience, inertia, the formation of habits, the use of rules of thumb, or the locking in on certain modes of behavior due to learning by doing. This paper provides discrete-time adjustment processes for strategic games in which players display precisely such a bias towards recent choices. In addition, players choose best replies to beliefs supported by observed play in the recent past, in line with much of the literature on learning. These processes eventually settle down in the minimal prep sets of Voorneveld (2004, 2005).

Keywords: adjustment; learning; minimal prep sets; behavioral bias; salience (search for similar items in EconPapers)
JEL-codes: C72 D83 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2005-03-07
New Economics Papers: this item is included in nep-cbe and nep-evo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: Learning to be Prepared (2005) Downloads
Working Paper: Learning to be Prepared (2005) Downloads
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