Journal
GAMES AND ECONOMIC BEHAVIOR
Volume 65, Issue 2, Pages 626-643Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1016/j.geb.2008.02.011
Keywords
Learning; Adaptive dynamics; Nash equilibrium; Bounded rationality
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A person learns by trial and error if he occasionally tries out new strategies, rejecting choices that are erroneous in the sense that they do not lead to higher payoffs. In a game. however, strategies can become erroneous due to a change of behavior by someone else. We introduce a learning rule in which behavior is conditional on whether a player experiences an error of the first or second type. This rule, called interactive trial and error learning, implements Nash equilibrium behavior in any game with generic payoffs and at least one pure Nash equilibrium. (C) 2008 Elsevier Inc. All rights reserved.
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