Learning to be Prepared

W. Kets, M. Voorneveld

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Abstract

Behavioral economics provides several motivations for the common observation that agents appear somewhat unwilling to deviate from recent choices.More recent choices can be more salient than other choices, or more readily available in the agent's mind.Alternatively, agents may have formed habits, use rules of thumb, or lock in on certain modes of behavior as a result of learning by doing.This paper provides discrete-time adjustment processes for strategic games in which players display precisely such a bias towards recent choices.In addition, players choose best replies to beliefs supported by observed play in the recent past, in line with much of the literature on learning.These processes eventually settle down in the minimal prep sets of Voorneveld [Games Econ.Behav. 48 (2004) 403-414, and Games Econ.Behav. 51 (2005) 228-232].
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages26
Volume2005-117
Publication statusPublished - 2005

Publication series

NameCentER Discussion Paper
Volume2005-117

Keywords

  • learning
  • adjustment
  • minimal prep sets
  • availability bias
  • salience
  • rules of thumb

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