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Author: Reinhard Tietz Publisher: Springer Science & Business Media ISBN: 3642483569 Category : Business & Economics Languages : en Pages : 369
Book Description
The book reports on recent experimental research on expectations and decision making in bargaining, markets, auctions, or coalition formation situations. The investi- gated topics deliver building stones for a bounded rational theory as an approach to explain behavior and interpersonal interactions in economic and social relationships.
Author: Reinhard Tietz Publisher: Springer Science & Business Media ISBN: 3642483569 Category : Business & Economics Languages : en Pages : 369
Book Description
The book reports on recent experimental research on expectations and decision making in bargaining, markets, auctions, or coalition formation situations. The investi- gated topics deliver building stones for a bounded rational theory as an approach to explain behavior and interpersonal interactions in economic and social relationships.
Author: S. Huck Publisher: Springer ISBN: 0230523374 Category : Business & Economics Languages : en Pages : 359
Book Description
This volume contains sixteen original articles documenting recent progress in understanding strategic behaviour. In their variety they reflect an entire spectrum of coexisting approaches: from orthodox game theory via behavioural game theory, bounded rationality and economic psychology to experimental economics. There are plenty of new models and insights but the book also illustrates the boundaries of what we know today and explains the frontiers of tomorrow. The articles were written in honour of Werner Güth.
Author: So Eun Park Publisher: ISBN: Category : Languages : en Pages : 93
Book Description
In economics, players are assumed to be rational: they exhibit self interested behavior and play equilibrium strategies. However, in laboratory games or actual markets, players often manifest behavior that is rather consistent with bounded rationality. This thesis consists of two chapters, which relax the standard assumptions on rationality and allow for bounded rationality of players. The first essay weakens the assumption that players are self interested. In this essay, a retail market is empirically investigated under the relaxed assumption that firms may not be purely self interested or profit maximizing. Standard models of price competition stipulate that firms are pure profit maximizers; this assumption can be sensible and empirically useful in inferring product markups in a market with no direct government intervention. However, in markets for essential goods such as food and healthcare, a government may wish to address its consumer surplus concerns by imposing regulatory constraints or actively participating as a player in the market. As a consequence, some firms may have objectives beyond profit maximization and standard models may induce systematic biases in empirical estimation. This essay develops the structural model of price competition where some firms have consumer surplus concerns. Our model is applied in order to understand demand and supply behaviors in a retail grocery market where the dominant retailer publicly declares its consumer surplus objective. Our estimation results show that the observed low prices of this retailer arise indeed as a consequence of its consumer surplus concerns instead of its low marginal costs. The estimated degree of consumer surplus concerns suggests that the dominant retailer weighs consumer surplus to profit in a 1 to 7 ratio. The counterfactual analysis reveals that if the dominant retailer were to be profit maximizing as in the standard model, its prices would increase by 6.09% on average. As a consequence, its profit would increase by 1.16% and total consumer surplus would decrease by 7.18%. To the contrary, competitors lower their prices in response to the dominant retailer's increased prices, i.e., become less aggressive as if they are strategic substitutes. Interestingly, even though profit of all firms increases, total social surplus would decrease by 3.21% suggesting that profit maximization by all firms induces an inefficient outcome for the market. The second essay relaxes the rationality assumption that players exhibit equilibrium behavior, and develops a model that explains nonequilibrium behavior of players in laboratory games. In standard nonequilibrium models of iterative thinking, there is a fixed rule hierarchy and every player chooses a fixed rule level; nonequilibrium behavior emerges when some players do not perform enough thinking steps. Existing approaches however are inherently static. In this essay, we generalize models of iterative thinking to incorporate adaptive and sophisticated learning. Our model has three key features. First, the rule hierarchy is dynamic, i.e., the action that corresponds to each rule level can evolve over time depending on historical game plays. Second, players' rule levels are dynamic. Specifically, players update beliefs about opponents' rule levels in each round and change their rule level in order to maximize payoff. Third, our model accommodates a continuous rule hierarchy, so that every possible observed action can be directly interpreted as a real-numbered rule level r. The proposed model unifies and generalizes two seemingly distinct streams of nonequilibrium models (level-k and belief learning models) and as a consequence nests several well-known nonequilibrium models as special cases. When both the rule hierarchy and players' rule levels are fixed, we have a static level-r model (which generalizes the standard level-k model). When only players' rule levels are fixed, our model reduces to a static level-r model with dynamic rule hierarchy and captures adaptive learning. When only the rule hierarchy is fixed, our model reduces to a dynamic level-r model and captures sophisticated learning. Since our model always converges to the iterative dominance solution, it can serve as a model of the equilibration process. Using experimental data on p-beauty contests, we show that our model describes subjects' dynamic behavior better than all its special cases. In addition, we collect new experimental data on a generalized price matching game. The estimation results show that it is crucial to allow for both adaptive and sophisticated learning in predicting dynamic choice behaviors across games.
Author: Gerd Gigerenzer Publisher: MIT Press ISBN: 9780262571647 Category : Business & Economics Languages : en Pages : 404
Book Description
In a complex and uncertain world, humans and animals make decisions under the constraints of limited knowledge, resources, and time. Yet models of rational decision making in economics, cognitive science, biology, and other fields largely ignore these real constraints and instead assume agents with perfect information and unlimited time. About forty years ago, Herbert Simon challenged this view with his notion of "bounded rationality." Today, bounded rationality has become a fashionable term used for disparate views of reasoning. This book promotes bounded rationality as the key to understanding how real people make decisions. Using the concept of an "adaptive toolbox," a repertoire of fast and frugal rules for decision making under uncertainty, it attempts to impose more order and coherence on the idea of bounded rationality. The contributors view bounded rationality neither as optimization under constraints nor as the study of people's reasoning fallacies. The strategies in the adaptive toolbox dispense with optimization and, for the most part, with calculations of probabilities and utilities. The book extends the concept of bounded rationality from cognitive tools to emotions; it analyzes social norms, imitation, and other cultural tools as rational strategies; and it shows how smart heuristics can exploit the structure of environments.
Author: C. M. Capra Publisher: Edward Elgar Publishing ISBN: 1785363336 Category : Business & Economics Languages : en Pages : 448
Book Description
The aim of this Handbook is twofold: to educate and to inspire. It is meant for researchers and graduate students who are interested in taking a data-based and behavioral approach to the study of game theory. Educators and students of economics will find the Handbook useful as a companion book to conventional upper-level game theory textbooks, enabling them to compare and contrast actual behavior with theoretical predictions. Researchers and non-specialists will find valuable examples of laboratory and field experiments that test game theoretic propositions and suggest new ways of modeling strategic behavior. Chapters are organized into several sections; each section concludes with an inspirational chapter, offering suggestions on new directions and cutting-edge topics of research in experimental game theory.
Author: Reinhard Tietz
Author: Reinhard Tietz
Author: Reinhard Tietz
Author: Werner Jammernegg
Author: Reinhard Tietz
Author: S. Huck
Author: So Eun Park
Author: Charles A. Holt
Author: Reinhard Selten
Author: Gerd Gigerenzer
Author: C. M. Capra