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  3. American Economic Review
  4. April 2016
  5. The Evolution of Strategic Sophistication

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

The Evolution of Strategic Sophistication

  • Nikolaus Robalino
  • Arthur Robson
American Economic Review
vol. 106, no. 4, April 2016
(pp. 1046–72)
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Abstract

This paper investigates the evolutionary foundation for our ability to attribute preferences to others, an ability that is central to conventional game theory. We argue here that learning others' preferences allows individuals to efficiently modify their behavior in strategic environments with a persistent element of novelty. Agents with the ability to learn have a sharp, unambiguous advantage over those who are less sophisticated because the former agents extrapolate to novel circumstances information about opponents' preferences that was learned previously. This advantage holds even with a suitably small cost to reflect the additional cognitive complexity involved. (JEL C73, D11, D83)

Citation

Robalino, Nikolaus, and Arthur Robson. 2016. "The Evolution of Strategic Sophistication." American Economic Review, 106 (4): 1046–72. DOI: 10.1257/aer.20140105

Additional Materials

JEL Classification

  • C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
  • D11 Consumer Economics: Theory
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness