Learning from Personal Experience: One Rational Guy and the Justification of Myopia |
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Authors: | Glenn Ellison |
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Institution: | Department of Economics, Massachusetts Institute of Technology, Cambridge, Massachusetts, 02139 |
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Abstract: | The paper examines a large population analog of fictitious play in which players learn from personal experience, focusing on what happens when a single rational player is added to the population. Because the learning process naturally generates contagion dynamics, the rational player at times has an incentive to act nonmyopically. In 2 × 2 games the dynamics are asymmetric and favor risk dominant equilibria. A variety of other examples are presented.Journal of Economic LiteratureClassification Number: C7. |
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