Incentives for Boundedly Rational Agents

Suren Basov

No 813, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: This paper develops a theoretical framework for analyzing incentive schemes under bounded rationality. It starts from a standard principal-agent model and then superimposes an assumption of boundedly rational behavior on the part of the agent. Boundedly rational behavior is modeled as an explicit optimization procedure which combines gradient dynamics with a specific form of social learning called imitation of scope.

Keywords: RATIONALITY; ECONOMIC MODELS; BEHAVIOUR (search for similar items in EconPapers)
JEL-codes: C60 D82 D83 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2001
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Journal Article: Incentives for Boundedly Rational Agents (2003)
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