Bounded Rationality: Static versus Dynamic Approach

Suren Basov

No 864, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: Two kinds of theories of the boundedly rational behavior are possible. Static theories focus on stationary behavior and do not include any explicit mechanism for temporal change. Dynamic theories, on the other hand, explicitly model the fine-grain adjustments made by the subjects in response to their recent experiences. The main contribution of this paper is to argue that the restrictions usually imposed on the distribution of choices in the static approach are generically not supported by an explicit adjustment mechanism.

JEL-codes: C0 D7 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2002
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Bounded rationality: static versus dynamic approaches (2005)
Working Paper: Bounded Rationality:Static Versus Dynamic Approaches (2003)
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