From Rationality to Irrationality: Dynamic Interacting Structures

Pierre Gosselin, Aïleen Lotz and Marc Wambst

MPRA Paper from University Library of Munich, Germany

Abstract: This article develops a general method to solve dynamic models of interactions between multiple strategic agents that extends the static model studied previously by the authors. It describes a general model of several interacting agents, their domination relations as well as a graph encoding their information pattern. It provides a general resolution algorithm and discusses the dynamics around the equilibrium. Our model explains apparent irrational or biased individual behaviors as the result of the actions of several goal-specific rational agents. Our main example is a three-agent model describing "the conscious", "the unconscious", and "the body". We show that, when the unconscious strategically dominates, the equilibrium is unconscious-optimal, but body and conscious-suboptimal. In particular, the unconscious may drive the conscious towards its goals by blurring physical needs. Our results allow for a precise account of agents' time rate preference. Myopic behavior among agents leads to oscillatory dynamics : each agent, reacting sequentially, adjusts its action to undo other agents' previous actions. This describes cyclical and apparently inconsistent or irrational behaviors in the dual agent. This cyclicality is present when agents are forward-looking, but can be dampened depending on the conscious sensitivity to other agents' actions.

Keywords: dual agent; conscious and unconscious, rationality; multi-rationality; emotions; choices and preferences; multi-agent model; consistency; game theory; strategical advantage. (search for similar items in EconPapers)
JEL-codes: B41 D01 D81 D82 (search for similar items in EconPapers)
Date: 2015-02-14
New Economics Papers: this item is included in nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://mpra.ub.uni-muenchen.de/62274/1/MPRA_paper_62274.pdf revised version (application/pdf)

Related works:
Working Paper: From Rationality to Irrationality: Dynamic Interacting Structures (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:62148

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