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Bounded rationality in differential games

Klaus Beckmann

No 178/2017, Working Paper from Helmut Schmidt University, Hamburg

Abstract: The present paper proposes a myopic, boundedly rational heuristic for individual decision-making in differential game settings. I demonstrate that this type of behaviour converges to Nash equilibrium in infinitely repeated stage games without a state variable if the stage game is strategically symmetric. Two examples are used to illustrate the application of the heuristic in differential games.

Keywords: differential games; simulation; bounded rationality (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-gth, nep-hpe, nep-mic, nep-ore and nep-upt
Date: 2017-12-19
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