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  4. June 2013
  5. Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games

Journal of Economic Literature

ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)

Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games

  • Vincent P. Crawford
Journal of Economic Literature
vol. 51, no. 2, June 2013
(pp. 512–27)
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Abstract

Harstad and Selten's article in this forum performs a valuable service by highlighting the dominance of optimization-based models over boundedly rational models in modern microeconomics, and questioning whether optimization-based models are a better way forward than boundedly rational models. This article complements Rabin's response to Harstad and Selten, focusing on modeling strategic behavior. I consider Harstad and Selten's examples and proposed boundedly rational models in the light of modern behavioral economics and behavioral game theory, commenting on the challenges that remain and the most promising ways forward.

Citation

Crawford, Vincent P. 2013. "Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games." Journal of Economic Literature, 51 (2): 512–27. DOI: 10.1257/jel.51.2.512

Additional Materials

JEL Classification

  • B40 Economic Methodology: General
  • C72 Noncooperative Games
  • D01 Microeconomic Behavior: Underlying Principles
  • D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
  • D80 Information, Knowledge, and Uncertainty: General