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Dissertations / Theses on the topic 'Bounded rationality'
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Kaur, Surinder. "Culturally bounded rationality." Thesis, Henley Business School, 1995. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.294508.
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Persson, Magnus. "Bounded Rationality and Exemplar Models." Doctoral thesis, Uppsala University, Department of Psychology, 2003. http://urn.kb.se/resolve?urn=urn:nbn:se:uu:diva-3572.
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<p>Bounded rationality is the study of how human cognition with limited capacity is adapted to handle the complex information structures in the environment. This thesis argues that in order to understand the bounded rationality of decision processes, it is necessary to develop decision theories that are computational process models based upon basic cognitive and perceptual mechanisms. The main goal of this thesis is to show that models of perceptual categorization based on the storage of exemplars and retrieval of similar exemplars whenever a new object is encountered (D. L. Medin & M. M. Schaffer, 1978), can be an important contribution to theories of decision making. Study I proposed, PROBEX (PROBabilities from Exemplars), a model for inferences from generic knowledge. It is a “lazy” algorithm that presumes no pre-computed abstractions. In a computer simulation it was found to be a powerful decision strategy, and it was possible to fit the model to human data in a psychologically plausible way. Study II was a theoretical investigation that found that PROBEX was very robust in conditions where the decision maker has very little information, and that it worked well even under the worst circumstances. Study III empirically tested if humans can learn to use exemplar based or one reason decision making strategies (G. Gigerenzer, P. Todd, & the ABC Research Group, 1999) where it is appropriate in a two-alternative choice task. Experiment 1 used cue structure and presentation format as independent variables, and participants easily used one reason strategies if the decision task presented the information as normal text. The participants were only able to use exemplars if they were presented as short strings of letters. Experiment 2 failed to accelerate learning of exemplar use during the decision phase, by prior exposure to exemplars in a similar task. In conclusion, this thesis supports that there are at least two modes of decision making, which are boundedly rational if they are used in the appropriate context. Exemplar strategies may, contrary to study II, only be used late in learning, and the conditions for learning need to be investigated further.</p>
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Östling, Robert. "Bounded rationality and endogenous preferences." Doctoral thesis, Handelshögskolan i Stockholm, Samhällsekonomi (S), 2008. http://urn.kb.se/resolve?urn=urn:nbn:se:hhs:diva-454.
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Vinokur, Leon. "Environmental policy and bounded rationality." Thesis, Queen Mary, University of London, 2010. http://qmro.qmul.ac.uk/xmlui/handle/123456789/1708.
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The Prospect Theory proposes to assess outcomes relative to a reference point (or benchmark). Although the literature recognises the relevance of dynamic benchmarks, most of the applications of Prospect Theory employ static reference points (or a status quo). This paper aims to develop a Prospect Theory framework for investment under uncertainty subject to a dynamic reference point, within the context of environmental policy making, where the distinction between a dynamic and a static frameworks is crucial. I evince that, in contrast to the static framework, in a dynamic framework the investor measures not only the absolute but also the relative risk premium (Sharpe ratio) of the investment opportunity, incorporating the risks and returns of a reference portfolio. I propose that there exists a relation between static and dynamic frameworks. Using the dynamic framework, I argue that in the environmental context international co-operation is the key to a successful environmental policy
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Köhler, Jonathan Hugh. "Bounded rationality in savings decisions." Thesis, University of York, 1996. http://etheses.whiterose.ac.uk/10878/.
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Zhang, Luyao. "Bounded Rationality and Mechanism Design." The Ohio State University, 2018. http://rave.ohiolink.edu/etdc/view?acc_num=osu1532692312980569.
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Wu, Yiping. "Bounded rationality for BitTorrent networks." Diss., Columbia, Mo. : University of Missouri-Columbia, 2008. http://hdl.handle.net/10355/6681.
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Thesis (M.S.)--University of Missouri-Columbia, 2008.<br>The entire dissertation/thesis text is included in the research.pdf file; the official abstract appears in the short.pdf file (which also appears in the research.pdf); a non-technical general description, or public abstract, appears in the public.pdf file. Title from title screen of research.pdf file (viewed on August 19, 2009) Includes bibliographical references.
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Feufel, Markus Alexander. "Bounded Rationality in the Emergency Department." Wright State University / OhioLINK, 2009. http://rave.ohiolink.edu/etdc/view?acc_num=wright1249241698.
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Salehnejad, Mohammad Reza. "From micro to macro : essays on rationality, bounded rationality, and microfoundations." Thesis, London School of Economics and Political Science (University of London), 2005. http://etheses.lse.ac.uk/1845/.
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This thesis examines some issues at the heart of theoretical macroeconomics, namely the possibility of establishing a predictive theory of individual behaviour and transforming it into a theory of the economy using aggregation. As regards individual behaviour, the basic idea in economics is that homo economicus follows the prescriptions of the expected utility theory. The thesis argues that the expected utility theory takes the agent's view of the economy as given, and is silent about how he models his choice situation and defines his decision problem. As a consequence, it is of only a minor contribution to the analysis of economic phenomena. To explain how the agent learns about the economy and thus models his choice situation, new classical economists have relatively recently proposed that the agent behaves like a statistician. That is, like a statistician, he theorises, estimates, and adapts in attempting to learn about the economy. The usefulness of this hypothesis for modelling the economy depends on the existence of a 'tight enough' theory of statistical inference. To address this issue, the thesis proposes a preliminary conjecture about how a statistician perceives and models a choice situation: the statistician regards measurable features of the environment as realisations of some random variables, with an unknown joint probability distribution. He first uses the data on these quantities to discover the joint probability distribution of the variables and then uses the estimate of the distribution to uncover the causal structure of the variables. If the resulting model turns out to be inadequate, the initial set of variables is modified and the two phases of inference are repeated. This setting allows the separation of probabilistic inference issues from those of causal inference. The thesis studies both stages of learning from data to argue why there cannot be a 'tight enough' theory of statistical learning. As a result, the marriage of the hypothesis that the agent behaves like a decision scientist with the one that he behaves like a statistician is not of much help in predicting behaviour and modelling the economy. The thesis next turns to the other issue relating to the move from a theory of individual behaviour to a theory of the economy. It argues that to explain economic phenomena it is necessary to view the economy as a society of interactive, and heterogeneous, agents. However, the regularities emerging in such a society are not directly related to the laws operating at the micro level. The connection between the individual and the aggregate levels is highly complex.
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Mirestean, Alin Tavi. "Decision making under uncertainty and bounded rationality." College Park, Md. : University of Maryland, 2005. http://hdl.handle.net/1903/2946.
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Thesis (Ph. D.) -- University of Maryland, College Park, 2005.<br>Thesis research directed by: Economics. Title from t.p. of PDF. Includes bibliographical references. Published by UMI Dissertation Services, Ann Arbor, Mich. Also available in paper.
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Cao, Cung Economics Australian School of Business UNSW. "Asymmetric and imperfect knowledge: a proposal to replace unbounded rationality with bounded rationality." Awarded by:University of New South Wales. School of Economics, 2007. http://handle.unsw.edu.au/1959.4/27025.
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The purpose of this thesis is to illustrate how the role of knowledge may be the missing link in economics and to argue that the assumption of unbounded rationality, which underpinned neoclassical economics, should be replaced by bounded rationality and that bounded rationality should be redefined as people are rational, but are constrained by asymmetric and imperfect knowledge. This decomposition of bounded rationality makes it possible for us to operationalize bounded rationality, which was founded by Herbert Simon in the 1950s, but has not been widely adopted in economics because the concept was considered too difficult to formalize. The inclusion of asymmetric and imperfect knowledge considerations in microeconomics provides new insights into the existence and boundaries of firms, the role and nature of institutions, financial market inefficiency and political choices. The inclusion of asymmetric knowledge considerations in macroeconomics can help explain the unequal distribution of wealth between individuals, firms and nations. A lack of knowledge, and the difficulties in overcoming a lack of knowledge, can help to explain aspects of economic fluctuations, prices rigidities, monetary non-neutrality and unemployment. Most importantly, when the role of knowledge is considered, it provides better explanations to various anomalies in economics, helps reconciles differences between various theories and may opens up the possibility of unifying various schools of economic thought.
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Manrique, Chaparro Olga Lucía. "Three essays on bounded rationality and strategic behavior." Doctoral thesis, Universitat Autònoma de Barcelona, 2012. http://hdl.handle.net/10803/96260.
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La tesis está conformada por tres papers, el primero titulado Some Strategic Aspects of Private Information: An Experimental Analysis, el segundo titulado Comportamiento Estratégico y Manipulabilidad en los Métodos de Preferencias Declaradas para la Valoración de Bienes sin Mercado. Tres Experimentos de Laboratorio, y el tercero titulado Mistakes and Reciprocity Promote Cooperation in Public Good Games: An agent-based Approach.
El objetivo principal de la tesis es testar mediante herramientas experimentales y simulaciones las hipótesis de perfecta racionalidad y comportamiento estratégico en tres diferentes contextos.
En el primero nos preocupamos por estudiar aspectos informacionales de juegos repetidos con información incompleta. El marco teórico es relativamente simple, un juego 2x2, con información incompleta que se repite infinitamente. Nos preguntamos si los jugadores que tienen información privada en la práctica toman ventaja de ello (comportamiento estratégico) y si los jugadores desinformados pueden adivinar el juego que están jugando cuando se les ha revelado información importante, tal como la teoría predice.
En el segundo contexto, nos interesa testar el supuesto de manipulabilidad (strategy proffness) en los métodos de preferencias declaradas para la valoración de bienes sin mercado. Diseñamos tres experimentos de laboratorio para diferentes formatos de valoración de preferencias declaradas: un referéndum puro, un formato de valoración contingente y un conjunto de elección con tres alternativas.
El tercero es un contexto en el que proponemos un modelo de evolución de la cooperación en bienes públicos, en ambientes en que agentes con diferentes grados de cooperación condicional actúan estratégicamente para decidir si cooperar o no. A diferencia de otros estudios donde el interés es comprender cómo emerge el altruismo o la reciprocidad, nosotros nos preocupamos por estudiar por qué la cooperación puede sobrevivir en esa clase de ambientes.<br>The thesis consists of three papers, the first entitled Some Strategic Aspects of Private Information: An Experimental Analysis, the second entitled Comportamiento Estratégico y Manipulabilidad en los Métodos de Preferencias Declaradas para la Valoración de Bienes sin Mercado. Tres Experimentos de Laboratorio, and the third entitled Mistakes and Reciprocity Promote Cooperation in Public Good Games: An agent-based Approach.
The main objective of the thesis is to test, using experimental and simulation tools, the assumptions of perfect rationality and strategic behavior in three different contexts.
In the first study we are concerned with informational aspects of repeated games with incomplete information. The theoretical framework is relatively simple, a 2x2 game with incomplete information that is infinitely repeated. We asked if players with private information, in practice, take advantage of it (strategic behavior), and if the uninformed players can guess the game they are playing when had been revealed important information, such as the theory predicts.
In the second context, we want to test the assumption of manipulability (strategy proffness) in stated preference methods for valuing non-market goods. We designed three laboratory experiments for different formats of stated preferences: a pure referendum, a contingent valuation method and choice set with three alternatives.
The third is a context in which we propose an evolution of cooperation model in public goods, in environments in which agents have different degrees of cooperation conditional and act strategically to deciding whether to cooperate or not. Unlike other studies where the interest is to understand how emerging altruism or reciprocity, we am interested in study why cooperation can survive in such environments.
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Reina, Livia. "From Subjective Expected Utility Theory to Bounded Rationality." Doctoral thesis, Saechsische Landesbibliothek- Staats- und Universitaetsbibliothek Dresden, 2006. http://nbn-resolving.de/urn:nbn:de:swb:14-1140624885934-50567.
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As mentioned in the introduction, the objective of this work has been to get a more realistic understanding of economic decision making processes by adopting an interdisciplinary approach which takes into consideration at the same time economic and psychological issues. The research in particular has been focused on the psychological concept of categorization, which in the standard economic theory has received until now no attention, and on its implications for decision making. The three experimental studies conducted in this work provide empirical evidence that individuals don not behave according to the perfect rationality and maximization assumptions which underly the SEUT, but rather as bounded rational satisfiers who try to simplify the decision problems they face through the process of categorization. The results of the first experimental study, on bilateral integrative negotiation, show that most of the people categorize a continuum of outcomes in two categories (satisfying/not satisfying), and treat all the options within each category as equivalent. This process of categorization leads the negotiators to make suboptimal agreements and to what I call the ?Zone of Agreement Bias? (ZAB). The experimental study on committees? decision making with logrolling provides evidence of how the categorization of outcomes in satisfying/not satisfying can affect the process of coalition formation in multi-issue decisions. In the first experiment, involving 3-issues and 3-parties decisions under majority rule, the categorization of outcomes leads most of the individuals to form suboptimal coalitions and make Pareto-dominated agreements. The second experiment, aimed at comparing the suboptimizing effect of categorization under majority and unanimity rule, shows that the unanimity rule can lead to a much higher rate of optimal agreements than the majority rule. The third experiment, involving 4-issues and 4-parties decisions provides evidence that the results of experiments 1 and 2 hold even when the level of complexity of the decision problem increases.
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Dindo, Pietro Dino Enrico. "Bounded rationality and heterogeneity in economic dynamic models." [Amsterdam] : Amsterdam : Thela Thesis ; Universiteit van Amsterdam [Host], 2007. http://dare.uva.nl/document/44334.
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Kneeland, Terri. "Bounded rationality in games : theory, experiments, and applications." Thesis, University of British Columbia, 2013. http://hdl.handle.net/2429/44573.
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This dissertation combines three contributions to the literature on bounded rationality in games. The aim of this thesis is to improve our understanding of how individuals make decisions in games, improve our ability to model this behavior and increase our understanding of how bounded rationality affects predictions, policy and optimal mechanisms.
The first paper is an application of a boundedly rational model to explain behavior in coordinated attack games. I demonstrate that the main experimental results, such as threshold strategies, comparative statics, and the differences in behavior under public and private information, are robust predictions of limited depth of reasoning models. This is in contrast to equilibrium, which mispredicts the coordinating roles of the different types of information. The analysis has implications for macroeconomic phenomena, like currency attacks and debt crises, which are commonly modeled using incomplete information coordinated attack games.
The second paper explores policy and optimal mechanism design under bounded rationality. Level-k implementation is contrasted with the more standard Bayesian implementation concept. I show that the revelation principle holds with an augmented message space and that level-k implementation is a weaker solution concept. In addition, level-k implementation is possible in a mechanism that is robust to different specifications of beliefs about depths of reasoning or to any specification of beliefs about payoffs.
The third paper takes a step back from assuming a particular solution concept and investigates empirical features of strategic reasoning in the lab. I employ strategic choice data from a carefully chosen set of ring games to obtain individual-level estimates of the following three epistemic conditions: rationality, beliefs about the rationality of others, and consistent beliefs. I find that not a single subject satisfies all three of the epistemic conditions sufficient for Nash equilibrium and that consistent beliefs, rather than rationality, is the more likely source for the failure of Nash equilibrium. The design allows us to weight the relative plausibility of alternative solution concepts used to explain laboratory results.
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Louvet, Anne-Claire Alice. "The bounded rationality constraint : experimental and analytical results." Thesis, Massachusetts Institute of Technology, 1988. http://hdl.handle.net/1721.1/14755.
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Jones, Matthew Thomas. "Essays on Bounded Rationality in Applied Game Theory." The Ohio State University, 2012. http://rave.ohiolink.edu/etdc/view?acc_num=osu1337782631.
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Bhattacharya, Shilpi <1982>. "Competition Law and the Bounded Rationality of Firms." Doctoral thesis, Alma Mater Studiorum - Università di Bologna, 2016. http://amsdottorato.unibo.it/7693/1/Bhattacharya_Shilpi_tesi.pdf.
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Firm rationality plays a role in several aspects of competition law. Yet, the conception of the firm as a rational, profit maximizing entity has been disputed in different disciplines. This literature shows that neoclassical economic assumptions on which competition law is based can fall short of explaining the full range of observed firm behaviour. Accordingly, an alternative conception of the firm as boundedly rational can impact the understanding of firm conduct in competition law.
Behavioural literature describes two different sources of bounded rationality in firms. Firstly, behavioural biases of managers, such as overconfidence bias can affect decision-making in a firm. Secondly, firms are constrained by their decision-making processes, which can cause departures from rationality.
This work examines the application of behavioural insights to two aspects of competition law - predatory pricing and mergers. It uses the case study method to individually examine firm behaviour in these situations. This thesis finds that, if firms are taken to be boundedly rational, intention can be relevant to predatory pricing because firms may cut prices with the intention of eliminating competitors even when there is little or no chance of recouping through higher prices. This is in contrast to the understanding of predatory pricing in US law, where recoupment is essential. Intent requires understanding how business decisions are taken and thus, provides an opening for behavioural insights to be introduced into predatory pricing law.
Merger analysis is particularly suited to behavioural insights as mergers are often either a result of managerial biases or a product of strategic considerations such as a response to entry by competitors. This thesis finds that insights from management studies could be useful to understanding possible anticompetitive motives behind mergers, particularly when these decisions are taken to eliminate close or potential competitors.
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DINDO, Pietro Dino Enrico. "Bounded rationality and heterogeneity in economic dynamic models." Doctoral thesis, THELA THESIS, 2007. http://hdl.handle.net/10278/3673678.
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Surucu, Oktay <1979>. "Three essays on economic interactions under bounded rationality." Doctoral thesis, Università Ca' Foscari Venezia, 2011. http://hdl.handle.net/10579/1052.
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The issues explored in this work concern economic interactions under bounded rationality. Each chapter considers these interactions from di erent angles. The first chapter characterizes the optimal contract designed by an ordinary pro t-maximizing monopoly when facing diversely bounded rational agents. The second chapter analyses the interaction between fully and boundedly rational agents in situations where their interests are perfectly aligned. Finally, the third chapter studies a model where a team of agents with limited problem-solving ability face a disjunctive task over a large solution space.<br>Ogni capitolo di questo lavoro di ricerca considera diversi temi concernenti interazioni economiche in presenza di razionalit a limitata. Il primo capitolo propone il contratto ottimale di un monopolio ordinario il quale massimizza il suo profitto in un contesto in cui gli agenti sono caratterizzati da diversa razionalit a limitata. Il secondo capitolo analizza l'interazione tra agenti con razionalit a piena e quelli con razionalit a limitata nel caso in cui i loro interessi siano perfettamente allineati. In ne, il terzo capitolo analizza un modello in cui un gruppo di agenti con limitata capacit a di risolvere problemi a ronta un compito disgiuntivo su uno spazio di soluzione di grandi dimensioni.
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Sandei, Laura <1990>. ""Bounded Rationality: la razionalità nelle scelte di investimento"." Master's Degree Thesis, Università Ca' Foscari Venezia, 2017. http://hdl.handle.net/10579/9461.
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"Quotidianamente l’essere umano si ritrova a dover affrontare delle scelte, come ad esempio delle scelte d’investimento, in cu il processo che conduce a prendere la decisione definitiva risulta essere sovente ricco di inconvenienti. Il presente elaborato presenta dunque in prima istanza l’evoluzione del pensiero economico riguardo al livello di razionalità nel comportamento decisionale umano, soffermandosi nel primo capitolo ad illustrare la teoria economica neoclassica, la quale sostiene che l’uomo sia dotato di razionalità assoluta, ovvero che disponga di tutte le capacità necessarie per scegliere l’alternativa migliore fra tutte quelle esistenti, in modo tale da riuscire a massimizzare sempre la propria utilità e di pervenire quindi alla decisione ottima. Il secondo capitolo, invece, descrive la “Bounded Rationality”, concetto ideato da H.A. Simon negli anni ‘50, il quale mette in discussione l’idea di homo oeconomicus, in quanto prevede che gli individui nella realtà non agiscono in maniera pienamente razionale, dati i limiti cognitivi e conoscitivi che li caratterizzano, bensì operino come “satisficers”, ossia puntino ad una risoluzione soddisfacente del problema piuttosto che ottimale. Nel terzo ed ultimo capitolo vengono proposti e analizzati due differenti esperimenti (il primo condotto all’università di Jena in Germania e il secondo presso l’Università Luiss di Roma) in cui sono messi a confronto i comportamenti dei partecipanti di fronte ai due approcci, satisficing e optimizing, dinnanzi a delle scelte di investimento."
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Perez, Fabien. "Bounded Rationality and Noise : Theory, Methods and Experiments." Electronic Thesis or Diss., Institut polytechnique de Paris, 2021. http://www.theses.fr/2021IPPAG008.
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La science économique s’intéresse à la façon dont les agents prennent des décisions dans des situations économiques. L'approche standard dans la littérature économique est de supposer que les agents sont parfaitement rationnels. Cependant, l'hypothèse de rationalité parfaite est très restrictive et peine parfois à expliquer le comportement empirique des agents. L'étude de la rationalité limitée des agents est donc une question centrale en économie. Cette thèse contribue à cette question de recherche en économie comportementale et expérimentale, en s’intéressant particulièrement aux comportements dans les environnements stratégiques ainsi qu’aux décisions bruitées (plutôt que purement déterministes).Ce manuscrit est composé de quatre chapitres. Les chapitres 1 et 2 abordent les comportements dans les interactions stratégiques sous différents angles. Les chapitres 3 et 4 s’intéressent à la question du bruit dans les tâches expérimentales.Le chapitre 1 offre un aperçu de la façon dont l'auto-sélection (le fait que les agents décident eux-mêmes s’ils participent à une situation économique) pourrait promouvoir la rationalité dans les environnements stratégiques. L'auto-sélection a rarement été étudiée dans le cadre de la rationalité limitée. Dans la plupart des expériences, une fois assis dans le laboratoire, les sujets sont obligés de participer à toutes les tâches auxquelles ils sont confrontés. Au contraire, dans de nombreuses situations économiques (par exemple les enchères et les marchés financiers), les agents peuvent choisir s'ils veulent participer. À cet égard, il est utile de comprendre les conséquences de l'auto-sélection. Nous évaluons l'évolution des stratégies lorsqu'une étape d'auto-sélection est ajoutée dans des jeux expérimentaux et nous étudions les moteurs potentiels de l'auto-sélection dans les jeux. Le chapitre 2 propose et teste un nouveau modèle de rationalité limitée dans les environnements stratégiques. Le modèle suppose l'existence de deux types de joueurs : les joueurs confus qui ne se forgent aucune croyance et qui jouent donc de manière aléatoire ou naïve, et les joueurs stratégiques qui se forgent des croyances (bruitées) sur la probabilité d'affronter un joueur confus ou stratégique. La stratégie de ces joueurs stratégiques est alors une meilleure réponse à leurs croyances bruitées. Le modèle présente des propriétés théoriques intéressantes. Il est de plus capable de prédire des données expérimentales avec un seul paramètre. Le chapitre 3 calibre l'erreur de mesure dans quatre tâches d'aversion au risque en exploitant un large ensemble d'expériences utilisant un protocole « test-retest » (une même tâche est effectuée plusieurs fois au sein d’une même expérience). Étant donné que l'erreur de mesure peut avoir un impact considérable sur l'analyse statistique, la quantification du bruit dans les mesures expérimentales revêt une importance particulière. Nous examinons également les conséquences de l'erreur de mesure associée à la discrétisation des mesures et aux échantillons de petite taille lors de l'estimation de régressions linéaires. Le chapitre 4 aborde les tâches visant à mesurer la confiance. En utilisant un protocole « test-retest », nous calibrons l'erreur de mesure dans les mesures de confiance standard : le comportement dans un jeu de confiance et les indices de confiance déclaratifs. Nous examinons enfin la façon dont les capacités cognitives et la concentration peuvent avoir un impact sur la quantité de bruit dans ces tâches expérimentales<br>Economists aim at understanding how agents make decisions in economic situations. The standard approach in the economic literature is to assume that agents are perfectly rational. However, the perfect rationality assumption is highly restrictive and does not perfectly capture how agents behave. Studying how bounded is the rationality of economic agents is thus a matter of prime importance. The present dissertation contributes to this research question in behavioral and experimental economics with a particular focus on behaviors in strategic environments and on noisy (rather than purely deterministic) decisions.The dissertation is composed of four chapters. Chapters 1 and 2 address behaviors in strategic interactions with different angles. Chapters 3 and 4 focus on the issue of noise in experimental tasks.Chapter 1 offers insight into how self-selection could promote rationality in strategic environments. Self-selection has seldom been studied under the scope of bounded rationality. In most experiments, once seated in the lab, subjects are forced to participate in all the tasks they faced. On the contrary, in many economic situations in the field (e.g. auctions, financial markets) agents can choose whether they want to participate. In this regard, understanding the consequences of self-selection is valuable. We assess the evolution of strategies when a self-selection stage is added in experimental games and study the potential drivers of self-selection into games. Chapter 2 proposes and tests a new model in behavioral game theory. The model assumes the existence of two types of players: confused players who do not form any beliefs and thus play randomly or naively, and strategic players who best respond to noisy beliefs regarding the probability of facing a confused or a strategic player. The model has interesting theoretical properties and fits experimental data with a single parameter. Chapter 3 calibrates measurement error in four risk-aversion tasks using a large set of existing test-retest experiments. Since measurement error can have a dramatic impact on statistical analysis, quantifying the noise in experimental measures is of particular importance. We also discuss the consequences of measurement error coupled with discrete approximations and small samples when performing linear regressions. Chapter 4 focuses on tasks aiming at eliciting trust. Using a test-retest experiment, we calibrate measurement error in standard trust measures, namely the behavior in a trust game and survey questions. We then discuss how cognitive skills and attention can drive noise in experimental tasks
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Wills, Jules A., and n/a. "Strategic planning in Commonwealth departments: beyond magaerialism: from bounded rationality to bounded uncertainty." University of Canberra. Administrative Studies, 1991. http://erl.canberra.edu.au./public/adt-AUC20060426.154713.
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Li, Yiran. "Is Rationality Bounded？ An Interpretation on Equity Premium Puzzle." Thesis, Linnéuniversitetet, Ekonomihögskolan, ELNU, 2011. http://urn.kb.se/resolve?urn=urn:nbn:se:lnu:diva-12215.
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Since equity premium puzzle had long been a problem, many economists tried to give reasonable interpretations to the puzzle. I focus on the type of theories using bounded rationality as the answer to the problem. I am willing to find out that whether the puzzle still exists in recent decades. If it does exist, are the theories of bounded rationality still able to explain the puzzle? In the beginning, I introduce two theories referring to bounded rationality. Afterwards, I empirically analyze the data of the U.S., Japan and Euro-area by using a simpler model based on rationality. Interestingly, circumstances vary a lot from country to country. One theory may be suitable for one country but not for the others. Even so, the “suitable” theory fails to completely explain the whole tendency of variation during the observed period in the country. In the future, we still need to explore in depth of the puzzle.
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Smith, Justin N. "Computational complexity, bounded rationality and the theory of games." Thesis, University of Oxford, 2000. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.365642.
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Lieder, Falk. "Beyond Bounded Rationality| Reverse-Engineering and Enhancing Human Intelligence." Thesis, University of California, Berkeley, 2018. http://pqdtopen.proquest.com/#viewpdf?dispub=10817569.
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<p> Bad decisions can have devastating consequences, and there is a vast body of literature suggesting that human judgment and decision-making are riddled with numerous systematic violations of the rules of logic, probability theory, and expected utility theory. The discovery of these <i>cognitive biases</i> in the 1970s challenged the concept of Homo sapiens as the rational animal and has profoundly shaken the foundations of economics and rational models in the cognitive, neural, and social sciences. Four decades later, these disciplines still lack a rigorous theoretical foundation that can account for people’s cognitive biases. Furthermore, designing effective interventions to remedy cognitive biases and improve human judgment and decision-making is still an art rather than a science. I address these two fundamental problems in the first and the second part of my thesis respectively. </p><p> To develop a theoretical framework that can account for cognitive biases, I start from the assumption that human cognition is fundamentally constrained by limited time and the human brain’s finite computational resources. Based on this assumption, I redefine human rationality as reasoning and deciding according to cognitive strategies that make the best possible use of the mind’s limited resources. I draw on the bounded optimality framework developed in the artificial intelligence literature to translate this definition into a mathematically precise theory of bounded rationality called <i>resource-rationality </i> and a new paradigm for cognitive modeling called <i>resource-rational analysis</i>. Applying this methodology allowed me to derive resource-rational models of judgment and decisionmaking that accurately capture a wide range of cognitive biases, including the anchoring bias and the numerous availability biases in memory recall, judgment, and decision-making. By showing that these phenomena and the heuristics that generate them are consistent with the rational use of limited resources, my analysis provides a rational reinterpretation of cognitive biases that were once interpreted as hallmarks of human irrationality. This suggests that it is time to revisit the debate about human rationality with the more realistic normative standard of resource-rationality. To enable a systematic assessment of the extent to which human cognition is resource- rational, I present an automatic method for deriving resource-rational heuristics from a mathematical specification of their function and the mind’s computational constraints. Applying this method to multi-alternative risky-choice led to the discovery of a previously unknown heuristic that people appear to use very frequently. Evaluating human decision-making against resource-rational heuristics suggested that, on average, human decision-making is at most 88% as resource-rational as it could be. </p><p> Since people are equipped with multiple heuristics, a complete normative theory of bounded rationality also has to answer the question of when each of these heuristics should be used. I address this question with a rational theory of strategy selection. According to this theory, people gradually learn to select the heuristic with the best possible speed-accuracy trade-off by building a predictive model of its performance. Experiments testing this model confirmed that people gradually learn to make increasingly more rational use of their finite time and bounded cognitive resources through a metacognitive reinforcement learning mechanism. </p><p> Overall, these findings suggest that—contrary to the bleak picture painted by previous research on heuristics and biases—human cognition is not fundamentally irrational, and can be understood as making rational use of bounded cognitive resources. By reconciling rationality with cognitive biases and bounded resources, this line of research addresses fundamental problems of previous rational modeling frameworks, such as expected utility theory, logic, and probability theory. Resource-rationality might thus come to replace classical notions of rationality as a theoretical foundation for modeling human judgment and decision-making in economics, psychology, neuroscience, and other cognitive and social sciences. </p><p> In the second part of my dissertation, I apply the principle of resource-rationality to develop tools and interventions for improving the human mind. Early interventions educated people about cognitive biases and taught them the normative principles of logic, probability theory, and expected utility theory. The practical benefits of such interventions are limited because the computational demands of applying them to the complex problems people face in everyday life far exceed individuals’ cognitive capacities. Instead, the principle of resource-rationality suggests that people should rely on simple, computationally efficient heuristics that are well adapted to the structure of their environments. Building on this idea, I leverage the automatic strategy discovery method and insights into metacognitive learning from the first part of my dissertation to develop intelligent systems that teach people resource-rational cognitive strategies. I illustrate this approach by developing and evaluating a cognitive tutor that trains people to plan resource-rationally. My results show that practicing with the cognitive tutor improves people’s planning strategies significantly more than does practicing without feedback. (Abstract shortened by ProQuest.)</p><p>
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Modarres-Mousavi, Shabnam. "Methodological Foundations for Bounded Rationality as a Primary Framework." Diss., Virginia Tech, 2002. http://hdl.handle.net/10919/30225.
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Experimental observations have shown that economic agents behave in ways different from the maximization of any utility function. Herbert Simon sought to deal with this by positing that individuals do not maximize, but rather "satisfice." This was a radical departure from the traditional economic framework, and one that still has not been adequately formalized. But Simon's suggestion is only the smallest part of what is needed for a theory that reflects the actual behavior. For instance, Simon's framework cannot deal with the observation that the act of choice changes the chooser. This dissertation is further developing Simon's original ideas through embracing John Dewey's transactional thinking to attain an adequate theory of economic choice that accounts for boundedly rational agents.
I clarify that substantive rationality and bounded (procedural) rationality share the same basic utilitarian assumption of predetermined goals. In terms of a Deweyan (transactional) analysis, the idea of utilitarian "optimization" ultimately guides and constrains both theories. But empirical study of choice behavior and the behavior of subjects in experimental laboratories, both indicate that neither substantive nor procedural rationality can effectively account for actual economic choices.
I emphasize the importance of treating bounded rationality without reference to the rational framework. To me, bounded rationality implies a realistic picture of behavior, which is associated with emerging goals and not ones that exist prior to the making of a choice. I consider uncertainty as a normal characteristic of the situation, which in turn allows consideration of acting based on inconsistent information, just as people actually do. The basis of a systematic approach to behavior that can capture inconsistency is developed by Tom Burke. He mathematizes Dewey's logic. He allows for impossible worlds in the set of states. Thus, not only can the initial state space hold inconsistent states, the information set can include mutually inconsistent elements.
So the current neoclassical paradigm resembles the representative realism, but is there any good reason why we should accept this methodology as economists? Whatever one's ultimate metaphysics and epistemology, I want to show that an alternative approach to economic decision-making may prove highly useful in theory and practice.<br>Ph. D.
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Petri, Castro Mikel. "Essays on nominal rigidities, bounded rationality, and macroeconomic policy." Thesis, Massachusetts Institute of Technology, 2020. https://hdl.handle.net/1721.1/129012.
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Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, September, 2020<br>Cataloged from student-submitted PDF of thesis.<br>Includes bibliographical references (pages 139-144).<br>This thesis consists of three chapters about macroeconomic policy. In the first chapter, I study the empirical relationship between nominal rigidities and the real effects of monetary policy. Nominal rigidities lie at the core of macroeconomics. The empirical evidence suggests that prices and wages adjust sluggishly to aggregate shocks, while theoretical models justify why and to what extent these rigidities imply monetary non-neutrality. However, direct evidence on nominal rigidities being the actual channel for the transmission of these shocks is relatively scarce. I construct a highly disaggregated measure of regional price stickiness for the U.S. and use it to provide evidence of this channel. My results are in line with sticky price models, indicating that employment in more rigid industries and commuting zones tend to have stronger reactions to monetary policy shocks.<br>In the second chapter, joint with Emmanuel Farhi and Iván Werning, we document the extreme sensitivity of New Keynesian models to fiscal policy announcements during a liquidity trap--a phenomenon we call the "fiscal multiplier puzzle". The response of current output to government spending grows exponentially in the horizon of the stimulus. Surprisingly, the introduction of rule-of-thumb hand-to-mouth agents, combined with deficit-financed stimulus, can easily generate negative multipliers that are equally explosive. This intuition translates to incomplete markets heterogeneous-agent New Keynesian models, leading to large negative multipliers when taxes are backloaded. We construct a belief-augmented New Keynesian framework to understand the role played by expectations in shaping the fiscal multiplier puzzle. The key element behind this result is the extreme coordination of the demand and supply blocks under rational expectations.<br>Common knowledge between these two blocks induces an inflation-spending feedback loop. Government spending boosts aggregate demand and drives up inflation, which in turn leads to lower real rates and higher spending by households, increasing aggregate demand again. We break this strategic complementarity by introducing bounded rationality in the form of level-k thinking. In contrast to rational expectations, level-k multipliers are bounded and tend to zero over infinite horizons for all finite k. Moreover, level-k interacts strongly with incomplete markets in two different ways. First, the attenuation of the multipliers increases for any level of k on the degree of market incompleteness, especially in the future. Second, in contrast to complete markets, incomplete markets increase the magnitude of the multipliers for low levels of k when taxes are backloaded, making deficits more effective at stimulating the economy.<br>In the third chapter, I explore the implications of downward nominal wage rigidities for fiscal policy and inflation in a liquidity trap. The standard Phillips Curve predicts big declines in economic activity should be accompanied by big deflation episodes. I study whether downward nominal wage rigidity can explain the missing deflation during the Great Recession. To do so, I introduce wage rigidity in a standard cash-in-advance liquidity trap model. My results show that nominal wage rigidities are consistent with mild deflationary episodes only when the trap is expected to be very short-lived. Away from this case, the model predicts large deflations and drops in output as in standard New Keynesian models. I also study the impact of fiscal policy in my setup, finding large multipliers that increase with the degree of wage rigidity. The main reason behind the effectiveness of government spending is its persistent effects on economic activity.<br>Wage rigidity generates unemployment persistence due to pent-up wage deflation. Fiscal spending boosts aggregate demand and decreases deflationary pressures today. This increases output today and in the future by relaxing the downward wage rigidity constraint in all subsequent periods. Keywords: nominal rigidities, price stickiness, monetary policy, regional, bounded rationality, incomplete markets, level-k, fiscal policy, downward nominal wage rigidity. JEL Classification: E52, E62, E7.<br>by Mikel Petri Castro.<br>Ph. D.<br>Ph.D. Massachusetts Institute of Technology, Department of Economics
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Soerensen, Jens Peter. "Bounded rationality, heterogeneous beliefs and the evolution of the economy." Thesis, University of Edinburgh, 1996. http://hdl.handle.net/1842/26952.
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In this thesis I study the implications of the speed of learning in an overlapping generations model. The equilibrium can be altered, for example, by a change in the level of government purchases and this can be financed in various ways. The purpose is to examine the effects on a number of important economic variables including welfare during the learning transition to the new steady state. Chapter 1 contains the introduction. In chapter 2 there is a comparison between an economy in which all agents are fast learners with an economy in which all agents are slow learners. Under certain conditions it is shown that while welfare may initially be higher in an economy with fast learners, this will not continue to be the case during the whole learning transition. After some time, possibly quite early, welfare will be higher in an economy populated by slow learners. This analysis is extended to a model with externalities and coordination failures in chapter 3 and models with random productivity and preference shocks are studied in chapter 4. In chapter 5, I consider the consequences of agents having heterogeneous expectations, i.e. slow and fast agents in the same economy. The analysis considers two issues: (i) under what conditions is convergence of learning guaranteed when there is heterogeneous learning and (ii) how does welfare compare for fast relative to slow learners, when there is a mixture of the two types. The stability analysis extends earlier results in the literature for the homogeneous case. The welfare comparison gives a much more intuitive result. The welfare of the fast agents is higher than the welfare of the slow agents during the entire learning transition. This does not depend on whether one is looking at expansionary or contractionary monetary policy, providing that the economy started in equilibrium.
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Georgiou, Phokion 'Ion' Sotirios. "Dogmatism and bounded rationality : a systemic epistemology for system theory." Thesis, Lancaster University, 2004. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.420564.
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Newholm, Terry. "Understanding the ethical consumer : employing a frame of bounded rationality." Thesis, Open University, 2000. http://oro.open.ac.uk/58071/.
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This thesis is about ethical consumers. In some business circles ethical consumers are treated simply as one kind of consumer in a market society where a niche can be created to satisfy every preference. Conversely some advocates of more radical change propose consumer activism as part of a movement which will force ethical considerations into the decision-making of capitalist businesses and governments alike. Questions about ethics are central to consumer society. Unlike most recent research into the 'green' or 'socially conscious' consumer that has been based on either extensive quantitative surveys or focus groups, the research presented here analyses consumer decisions in a social context. Sixteen case studies of ethical consumers in differing circumstances are developed in considerable detail. Starting from the theoretical observation that being an ethical consumer presents apparently daunting difficulties, especially with respect to decision making, the research uses bounded rationality theory to explain how these cases maintain their self-image as ethical. From these data I suggest thinking of ethical consumers as adopting coping strategies. Those contributing to the study were seen to be 'distancing' themselves from practices they consider unethical, 'integrating' their lives around addressing the issues current in ethical consumer discourse and/or 'rationalising' their ethical consumption against their acceptance of consumer capitalism. Each strategy can be shown to reduce the scope and/or difficulty of decision making. Finally, consideration is given to the nature of ethical consumption as a political project. Individual consumers respond in diverse ways to a social discourse on any given ethical issue even where strong and clear consumption advice is given. I argue that ethical consumerism is limited by the capacity of individuals to give attention to more than a few actions. Its political significance is nevertheless enhanced by the unpredictability of consumer response.
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Lorkowski, Joseph A. "Bounded rationality in decision making under uncertainty| Towards optimal granularity." Thesis, The University of Texas at El Paso, 2016. http://pqdtopen.proquest.com/#viewpdf?dispub=10000752.
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<p> Starting from well-known studies by Kahmenan and Tversky, researchers have found many examples when our decision making seems to be irrational. We show that this seemingly irrational decision making can be explained if we take into account that human abilities to process information are limited. As a result, instead of the exact <i>values</i> of different quantities, we operate with <i>granules</i> that contain these values. On several examples, we show that optimization under such granularity restriction indeed leads to observed human decision making. Thus, granularity helps explain seemingly irrational human decision making.</p><p> Similar arguments can be used to <i>explain</i> the success of <i>heuristic techniques</i> in expert decision making. We use these explanations to <i>predict</i> the <i>quality</i> of the resulting <i>decisions.</i> Finally, we explain how we can <i> improve</i> on the existing <i>heuristic techniques</i> by formulating and solving the corresponding optimization problems.</p>
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Newholm, Terry. "Understanding the ethical consumer : employing a frame of bounded rationality." n.p, 1999. http://ethos.bl.uk/.
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Caton, Jacob N. "Models of Knowledge for Resource Bounded Agents." Diss., The University of Arizona, 2012. http://hdl.handle.net/10150/223361.
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We know things about the world in spite of our cognitive limitations and imperfections. Occasions of stress impact memory retrieval, resources for attention can be depleted by non-epistemic factors, and our visual system has limited resolution and discriminatory ability. Yet we know many propositions, ranging from the mundane to the arcane, and we often are able to know that we know these things. In this dissertation I explore the relationship between our cognitive limitations and the limits to what we know, and what we know that we know. I begin by considering a simple model of knowledge. Because it is difficult (perhaps impossible) to have intuitions about many higher-order or iterative knowledge claims ("I know that you know that she knows that I know that ..."), a modeling approach can help clarify and explain how various cognitive limitations impact knowledge and higher-order knowledge. In Chapter 2 I discuss the epistemic requirements for the rational coordination of our actions. While it may seem that coordination is rational only if each coordinating member has what may be called "common knowledge" of some relevant proposition, the model of knowledge I employ helps show the informational complexity of common knowledge. I argue that common knowledge is unattainable. In Chapter 3 I discuss epistemic closure. Perfectly ideal agents may know every deductive consequence of what they know, but if the aim is to understand how deduction extends human knowledge then it is necessary to model our cognitive access to information. In Chapter 4 I turn to the issue of higher-order or iterative knowledge. I argue that memory limitations and various information processing errors all result in failures of higher-order knowledge. The argument I give does not require epistemic closure or a principle of self-knowledge. I conclude, in Chapter 5, by discussing interpretive issues for models of knowledge and I discuss our awareness of what we know and what we do not know.
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Whitehead, Duncan. "Three essays on bounded rationality and individual learning in repeated games." Thesis, University of Edinburgh, 2009. http://hdl.handle.net/1842/29422.
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In the first chapter, we revisit the El Farol bar problem developed by Brian W. Arthur (1994) to investigate how one might best model bounded rationality in economics. We begin by modelling the El Farol bar problem as a market entry game and describing its Nash equilibria. Then, assuming agents are boundedly rational in accordance with a reinforcement learning model, we analyse long-run behaviour in the repeated game. In a single population of individuals playing the El Farol game, reinforcement learning predicts that the population is eventually subdivided into two distinct groups: those who invariably go to the bar and those who almost never do. We demonstrate that reinforcement learning predicts sorting in the El Farol bar problem. The second chapter considers the long-run behaviour of agents learning in finite population games with random matching. In particular we study finite population games composed of anti-coordination pair games. We find the set of conditions for the payoff matrix of the two-player game that ensures the existence of strict pure strategy equilibria in the finite population game. Furthermore, we suggest that if the population is sufficiently large and the two-player pair games meet certain criteria, then the long-run behaviour of individuals, learning in accordance with the Erev and Roth (1998) reinforcement model, asymptotically converges to pure strategy profiles of the population game. The third chapter investigates some of the theoretical predictions of learning theory in anti-coordination finite population games with random matching through laboratory experiments in economics. Previous data from experiments on anti-coordination games has focused on aggregate behaviour and has evidence that outcomes mimic the mixed strategy equilibrium. Here we show that in finite population anti-coordination games, reinforcement learning predicts sorting; that is, in the long run, agents play pure strategy equilibria where subsets of the population permanently play each available action.
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Quilter, Tom. "Essays on the evolution of social co-ordination and bounded rationality." Thesis, University of Edinburgh, 2010. http://hdl.handle.net/1842/4462.
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Many evolutionary game theory papers have obtained their results when the bounded rationality which creates change vanishes. In our first chapter we consider whether such results are actually a good reflection of a population whose bounded rationality is small yet persistent. Our model consists of a two type population with three stable equilibria. Firstly we find that results from the standard vanishing noise approach can be very different from those obtained when noise is small but constant. Secondly when the results differ the small and persistent noise approach selects an equilibrium with a co-existence of conventions. Our second chapter generalises the model of our first chapter to a population of many player types and several stable equilibria. Firstly we produce the characteristics of the long run equilibria under vanishing noise analysis. Secondly we find that the introduction of a small neutral group into a divided society can produce a welfare improving switch in the long run equilibrium towards social co-ordination. Our third chapter combines the model of the second chapter with the message of the first. We show numerically that the long run location of a heterogenous population with extremely low levels of bounded rationality can be completely different to the equilibria selected through vanishing noise analysis. We also show that such an event is not a rare occurrence and find that over a third of populations are misrepresented by stochastic stability. Our final chapter conducts a review of the literature on social threshold models. We give a thorough description of each paper and discuss the main assumptions that drive the key results.
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Li, Li, and 李利. "Judicial discretion within adjudicative committee proceedings inChina: a bounded rationality analysis." Thesis, The University of Hong Kong (Pokfulam, Hong Kong), 2010. http://hub.hku.hk/bib/B46967412.
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Poulsen, Lauge N. Skovgaard. "Sacrificing sovereignty by chance : investment treaties, developing countries, and bounded rationality." Thesis, London School of Economics and Political Science (University of London), 2011. http://etheses.lse.ac.uk/141/.
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One of the striking features of modern globalization is the rising prominence of international law as governing institution for state-market relations. Nowhere has this been as pronounced as in the international investment regime. Although hardly known to anyone but specialized international lawyers merely 15 years ago, bilateral investment treaties (BITs) have today become some of the most potent legal tools underwriting economic globalization. This thesis seeks to explain why developing countries adopted investment treaties as part of their governing apparatus. The study combines econometric analysis with archival work as well as insights from more than one hundred interviews with decision-makers in the international investment regime. On this basis, it finds ‘traditional’ explanatory models of international policy diffusion insufficient to account for the BIT-movement. Instead, both qualitative and econometric evidence strongly indicates that a bounded rationality framework is best suited to explain the popularity of BITs in the developing world. Although careful cost-benefit considerations drove some developing countries to adopt investment treaties, this was rare. By overestimating the benefits of BITs and ignoring the risks, developing country governments often saw the treaties as merely ‘tokens of goodwill’. Many thereby sacrificed their sovereignty more by chance than by design, and it was typically not until they were hit by their first claim, officials realised that the treaties were enforceable in both principle and fact. The thesis is relevant to a wide range of literature. Apart from being the first comprehensive international relations study on investment treaties, its multimethod approach provides a robust and nuanced view of the drivers of international policy diffusion. Moreover, the study is the first major work in international political economy literature applying insights on systematic – and thus predictable – cognitive heuristics found in the behavioural economics discipline.
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Dombeck, Brian. "The Effects of News Shocks and Bounded Rationality on Macroeconomic Volatility." Thesis, University of Oregon, 2017. http://hdl.handle.net/1794/22636.
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This dissertation studies the impact embedding boundedly rational agents in real business cycle-type news-shock models may have on a variety of model predictions, from simulated moments to structural parameter estimates. In particular, I analyze the qualitative and quantitative effects of assuming agents are boundedly rational in a class of DSGE models which attempt to explain the observed volatility and comovements in key aggregate measures of U.S. economic performance as the result of endogenous responses to information in the form of ``news shocks''. The first chapter explores the theoretical feasibility of relaxing the rational expectations hypothesis in a three-sector real business cycle (RBC) model which generates boom-bust cycles as a result of periods of optimism and pessimism on the part of households. The second chapter determines whether agents forming linear forecasts of shadow prices in a nonlinear framework can lead to behavior approximately consistent with fully informed individuals in a one-sector real business cycle model. The third chapter analyzes whether empirical estimates of the relative importance of anticipated shocks may be biased by assuming rational expectations.
By merging the two hitherto separate but complementary strands of literature related to bounded rationality and news shocks I am able to conduct in-depth analysis of the importance of both the information agents have and what they choose to do with it. At its core, the study of news in macroeconomics is a study of the specific role alternative information sets play in generating macroeconomic volatility. Adaptive learning on the other hand is concerned with the behavior of agents given an information set. Taken together, these fields jointly describe the input and the ``black box'' which produce model predictions from DSGE models. While previous research has been conducted on the effects of bounded rationality or news shocks in isolation, this dissertation marks the first set of research explicitly focused on the interaction of these two model features.
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McComb, Greg. "A contingent valuation study of Winnipeg municipal water quality using bounded rationality." Thesis, National Library of Canada = Bibliothèque nationale du Canada, 2000. http://www.collectionscanada.ca/obj/s4/f2/dsk1/tape3/PQDD_0019/MQ56139.pdf.
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Dudebout, Nicolas. "Empirical-evidence equilibria in stochastic games." Diss., Georgia Institute of Technology, 2014. http://hdl.handle.net/1853/52205.
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The objective of this research is to develop the framework of empirical-evidence equilibria (EEEs) in stochastic games. This framework was developed while attempting to design decentralized controllers using learning in stochastic games. The overarching goal is to enable a set of agents to control a dynamical system in a decentralized fashion. To do so, the agents play a stochastic game crafted such that its equilibria are decentralized controllers for the dynamical system. Unfortunately, there exists no algorithm to compute equilibria in stochastic games. One explanation for this lack of results is the full-rationality requirement of game theory. In the case of stochastic games, full rationality imposes that two requirements be met at equilibrium. First, each agent has a perfect model of the game and of its opponents strategies. Second, each agent plays an optimal strategy for the POMDP induced by its opponents strategies. Both requirements are unrealistic. An agent cannot know the strategies of its opponents; it can only observe the combined effect of its own strategy interacting with its opponents. Furthermore, POMDPs are intractable; an agent cannot compute an optimal strategy in a reasonable time. In addition to these two requirements, engineered agents cannot carry perfect analytical reasoning and have limited memory; they naturally exhibit bounded rationality. In this research, bounded rationality is not seen as a limitation and is instead used to relax the two requirements. In the EEE framework, agents formulate low-order empirical models of observed quantities called mockups. Mockups have unmodeled states and dynamic effects, but they are statistically consistent; the empirical evidence observed by an agent does not contradict its mockup. Each agent uses its mockup to derive an optimal strategy. 1Since agents are interconnected through the system, these mockups are sensitive to the specific strategies employed by other agents. In an EEE, the two requirements are weakened. First, each agent has a consistent mockup of the game and the strategies of its opponents. Second, each agent plays an optimal strategy for the MDP induced by its mockup. The main contribution of this dissertation is the use of modeling to study stochastic games. This approach, while common in engineering, had not been applied to stochastic games.
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GALLASSI, GINEVRA. "Essays on Monetary Policy, Stock Market and Heterogeneous Expectations." Doctoral thesis, Università degli Studi di Milano-Bicocca, 2019. http://hdl.handle.net/10281/241075.
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Il presente lavoro si propone di studiare la relazione che intercorre tra la politica monetaria, il prezzo delle azioni e le aspettative eterogenee. Come Bernanke e Gertler (1999) prima di noi, l’obiettivo è quello di dare una risposta alla seguente domanda: nelle loro decisioni di politica monetaria le banche centrali devono rispondere anche alle fluttuazioni dei prezzi sul mercato azionario?
Nel primo capitolo il modello utilizzato è un perpetual youth à la Blanchard (1985) e Yaari
(1965) che viene ripreso da Nisticò (2012), al quale facciamo riferimento nel presente lavoro. Questo tipo di modello fa in modo che le fluttuazioni nei prezzi delle azioni abbiano un effetto significativo sull’andamento del consumo aggregato e di conseguenza sull’equilibrio: si crea, così, un nuovo canale di trasmissione denominato canale della ricchezza finanziaria. La formazione delle aspettative riprende Brock and Hommes (1997) e De Grauwe (2011). Gli agenti hanno una razionalità limitata, per fare previsioni utilizzano semplici euristiche e si basano su uno specifico meccanismo di adeguatezza per valutare le prestazioni passate. Attraverso questo meccanismo, l’andamento delle variabili economiche `e strettamente correlato con le aspettative degli individui. Inoltre, la presenza di aspettative eterogenee fa s`ı che il trade-off tra inflazione e output gap, tipico dei modelli con aspettative razionali, svanisca. Infine, il modello dimostra come, contrariamente a quanto suggerito da Bernanke e Gertler (1999), le banche centrali dovrebbero rispondere alle fluttuazioni del mercato azionario. Tuttavia, affinché questo tipo di politica monetaria sia efficace, tale reazione deve essere moderata.
Nel secondo capitolo, utilizziamo un diverso tipo di aspettative: mentre il modello di base segue sempre la struttura del perpetual youth di Nisticò (2012), le aspettative si basano sulla teoria dei Rational Beliefs di Kurz (1994, 1997). La configurazione del modello fa sì che le fluttuazioni dei prezzi dei titoli abbiano un impatto sull’economia reale attraverso due canali distinti: il canale della ricchezza finanziaria e quello delle aspettative. I risultati sono stati ottenuti applicando sia la teoria dei Rational Beliefs, sia la teoria di Rational Expectations. Diversamente da quanto raccomandato da Bernanke and Gertler (1999), i risultati mostrano che le politiche di stabilizzazione dell’output gap e dell’inflazione, condotte dalle banche centrali, possono trarre beneficio dall’inclusione di una risposta alle fluttuazioni sul mercato azionario. Inoltre, quando assumiamo aspettative eterogenee,
tutti i risultati presentano volatilità più alte rispetto al caso di Rational Expectations e le risposte agli shock mostrano magnitudini maggiori dovute all’effetto amplificatore dell’andamento delle aspettative. Ad esempio, un grande ottimismo tra gli individui ha un effetto positivo sull’inflazione e sull’output gap e può produrre bolle sul mercato azionario. Tale entusiasmo può essere però ridotto attraverso una politica monetaria maggiormente “aggressiva”.<br>This dissertation investigates the relationship among heterogeneous expectations, stock prices and monetary policy. In particular, we attempt to answer the question on whether or not central banks should respond to stock prices other than to inflation and output gap.
The first chapter presents a perpetual youth model à la Blanchard (1985) and Yaari (1965) following Nisticò (2012). This type of model generates a financial wealth channel through which stock prices fluctuations affect the dynamics of the aggregate consumption, and thus the equilibrium solution. We model expectations as in Brock and Hommes (1997) and De Grauwe (2011). Agents are boundedly rational, they adopt simple rules to make forecasts and evaluate their past performances using a fitness measure. The model generates endogenous waves of optimism and pessimism due to the correlation among beliefs. Moreover, the presence of this heterogeneity removes the classic trade-off between output gap and inflation typical of Rational Expectations models. We also show that, contrary to the Bernanke and Gertler’s (1999) prescription, central banks should respond to stock prices fluctuations. However, to be beneficial, this “leaning against
the wind” strategy in the stock market has to be moderate.
In the second chapter, we adopt the same baseline model of the first part. We build on
Nisticò (2012) and allow for the inclusion of diverse beliefs following the Rational Beliefs theory by Kurz (1997). With respect to the previous work, beliefs are modeled at a micro-level and enter in the equilibrium solution. Although agents do not observe the true dynamics of the economy, they are still rational in the sense that their beliefs are compatible with the observable empirical distribution of past data. In this framework, stock prices fluctuations affect real economy through two different channels: the financial wealth channel and the expectational channel. We simulate the model under both Rational Expectations and Rational Beliefs. Contrary to Bernanke and Gertler’s (1999) prescription, we find that a mild “leaning against the wind” strategy in the stock market is beneficial for both output gap and inflation stabilization. Moreover, all results under Rational Beliefs exhibit a higher volatility and the magnitude of responses to shock is amplified by
beliefs dynamics. Widespread optimism boosts inflation as well as output gap and can generate a bubble in stock prices. However, the effect on the real economy of such exuberance might be reduced by a more “aggressive” policy.
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Buckenmaier, Johannes [Verfasser], Carlos [Gutachter] Alós-Ferrer, and Larbi [Gutachter] Alaoui. "Evolution, Bounded Rationality and Institutions / Johannes Buckenmaier ; Gutachter: Carlos Alós-Ferrer, Larbi Alaoui." Köln : Universitäts- und Stadtbibliothek Köln, 2017. http://d-nb.info/1152004859/34.
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CRISTOFARO, MATTEO. "Bounded rationality in managerial decision making: addressing the what, why and how questions." Doctoral thesis, Università degli Studi di Roma "Tor Vergata", 2016. http://hdl.handle.net/2108/202661.
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Ho, Ngoc Duc. "Resource-Bounded Reasoning about Knowledge." Doctoral thesis, Universitätsbibliothek Leipzig, 2004. http://nbn-resolving.de/urn:nbn:de:bsz:15-qucosa-36935.
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Der Begriff ``Agent'' hat sich als eine sehr nützliche Abstraktion erwiesen, um verschiedene Problembereiche auf eine intuitive und natürliche Art und Weise zu konzeptualisieren. Intelligente Agenten haben daher Anwendung gefunden in verschiedenen Teilbereichen der Informatik. Zur Modellierung werden intelligente Agenten meist als intentionale Systeme aufgefaßt und mit Hilfe von mentalistischen Begriffen wie Wissen, Glauben (oder Überzeugung), Wunsch, Pflicht, Intention usw. beschrieben. Unter diesen mentalen Begriffen gehören die epistemischen Begriffe (d.h., Wissen und Glauben) zu den wichtigsten und wurden auch am intensivsten untersucht. Zur Modellierung von Wissen und Glauben werden in der Regel modale epistemische Logiken verwendet. Solche Systeme sind aber nicht geeignet, um ressourcenbeschränkte Agenten zu beschreiben, weil sie zu starke Annahmen bezüglich der Rationalität von Agenten machen. Zum Beispiel wird angenommen, daß Agenten alle logischen Wahrheiten sowie alle Konsequenzen seines Wissens kennen. Dieses Problem ist bekannt als das Problem der logischen Allwissenheit (``logical omniscience problem''). Da alle Agenten grundsätzlich nur über begrenzte Ressourcen (wie z.B. Zeit, Information, Speicherplatz) verfügen, können sie nur eine begrenzte Menge von Informationen verarbeiten. Daher müssen alternative Modelle entwickelt werden, um Agenten realistisch modellieren zu können (siehe Kapitel 2). Daß modale epistemische Logik für die Formalisierung des ressourcenbeschränkten Schließens (``resource-bounded reasoning'') nicht geeignet ist, wird als ein offenes Problem der Agententheorien anerkannt. Es gibt bisher aber keine brauchbaren Alternativen zur Modallogik. Die meisten Ansätze zur Lösung des logischen Allwissenheitsproblems versuchen, Wissen und Glauben mit Hilfe schwacher Modallogiken zu beschreiben. Solche Versuche sind nicht befriedigend, da sie eine willkürliche Einschränkung der Rationalität der Agenten zur Folge haben (siehe Kapitel 3). Mein Ziel ist es, einen Rahmen für das ressourcenbeschränktes Schließen über Wissen und Glauben zu entwickeln. Damit soll eine solide Grundlage für Theorien intelligenter Agenten geschaffen werden. Als Nebenergebnis wird das logische Allwissenheitsproblem auf eine sehr intuitive Art und Weise gelöst: obwohl Agenten rational sind und alle logischen Schlußregeln anwenden können, sind sie nicht logisch allwissend, weil ihnen nicht genügend Ressourcen zu Verfügung stehen, um alle logischen Konsequenzen ihres Wissens zu ziehen. Im Kapitel 4 wird eine Reihe von Logiken vorgestellt, die den Begriff des expliziten Wissens formalisieren. Es wird eine Lösung des Problems der logischen Allwissenheit der epistemischen Logik vorgeschlagen, die die Rationalität der Agenten nicht willkürlich einschränkt. Der Grundgedanke dabei ist der folgende. Ein Agent kennt die logischen Konsequenzen seines Wissens nur dann, wenn er sie tatsächlich hergeleitet hat. Wenn ein Agent alle Prämissen einer gültigen Schlußregel kennt, kennt er nicht notwendigerweise die Konklusion: er kennt sie nur nach der Anwendung der Regel. Wenn er den Schluß nicht ziehen kann, z.B. weil er nicht die notwendigen Ressourcen dazu hat, wird sein Wissen nicht um diese herleitbare Information erweitert. Die Herleitung neuer Informationen wird als die Ausführung mentaler Handlungen aufgefaßt. Mit Hilfe einer Variante der dynamischen Logik können diese Handlungen beschrieben werden. Im Kapitel 5 werden Systeme für das ressourcenbeschränkte Schließen über Wissen und Glauben entwickelt, die auch quantitative Bedingungen über die Verfügbarkeit von Ressourcen modellieren können. Mit Hilfe dieser Logiken können Situationen beschrieben werden, wo Agenten innerhalb einer bestimmten Zeitspanne entscheiden müssen, welche Handlungen sie ausführen sollen. Der Ansatz besteht darin, epistemische Logik mit Komplexitätstheorie zu verbinden. Mit Hilfe einer Komplexitätsanalyse kann ein Agent feststellen, ob ein bestimmtes Problem innerhalb vorgegebener Zeit lösbar ist. Auf der Grundlage dieses Wissens kann er dann die für die Situation geeignete Entscheidung treffen. Damit ist es gelungen, eine direkte Verbindung zwischen dem Wissen eines Agenten und der Verfügbarkeit seiner Ressourcen herzustellen<br>One of the principal goals of agent theories is to describe realistic, implementable agents, that is, those which have actually been constructed or are at least in principle implementable. That goal cannot be reached if the inherent resource-boundedness of agents is not treated correctly. Since the modal approach to epistemic logic is not suited to formalize resource-bounded reasoning, the issue of resource-boundedness remains one of the main foundational problems of any agent theory that is developed on the basis of modal epistemic logic. My work is an attempt to provide theories of agency with a more adequate epistemic foundation. It aims at developing theories of mental concepts that make much more realistic assumptions about agents than other theories. The guiding principle of my theory is that the capacities attributed to agents must be empirically verifiable, that is, it must be possible to construct artificial agents which satisfy the specifications determined by the theory. As a consequence, the unrealistic assumption that agents have unlimited reasoning capacities must be rejected. To achieve the goal of describing resource-bounded agents accurately, the cost of reasoning must be taken seriously. In the thesis I have developed a framework for modeling the relationship between knowledge, reasoning, and the availability of resources. I have argued that the correct form of an axiom for epistemic logic should be: if an agent knows all premises of a valid inference rule and if he performs the right reasoning, then he will know the conclusion as well. Because reasoning requires resources, it cannot be safely assumed that the agent can compute his knowledge if he does not have enough resources to perform the required reasoning. I have demonstrated that on the basis of that idea, the problems of traditional approaches can be avoided and rich epistemic logics can be developed which can account adequately for our intuitions about knowledge
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Yi, Hyun Chang. "Essays in economic theory." Thesis, University of Exeter, 2014. http://hdl.handle.net/10871/15246.
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This dissertation consists of three research papers on cheap talk game and satisficing behaviour. The first chapter examines the potential for communication via cheap talk between an expert and a decision maker whose type (preferences) is uncertain. The expert privately observes states for each type of the decision maker and wants to persuade the decision maker to choose an action in his favour by informing her of the states. The decision maker privately observes her type and chooses an action. An optimal action for the decision maker depends upon both her type and type-specific states. In equilibrium the expert can always inform the decision maker in the form of comparative statements and the decision maker also can partially reveal her type to the expert or public. The second and third chapters build a dynamic model of satisficing behaviour in which an agent’s “expected” payoff is explicitly introduced, where this expectation is adaptively formed. If the agent receives a payoff above her satisficing level she continues with the current action, updating her valuation of the action. If she receives a payoff below her satisficing level and her valuation falls below her satisficing level she updates both her action and satisficing level. In the second chapter, we find that in the long run, all players satisfice. In individual decision problems, satisficing behaviour results in cautious, maximin choice and in normal form games like the Prisoner’s Dilemma and Stag Hunt, they in the long run play either cooperative or defective outcomes conditional on past plays. In coordination games like the Battle of the Sexes, Choosing Sides and Common Interest, they in the long run coordinate on Pareto optimal outcomes. In the third chapter, we find that satisficing players in the long run play subgame dominant paths, which is a refinement of subgame perfection, and identify conditions with which they ‘always cooperate’ or ‘fairly coordinate’ in repeated Prisoner’s Dilemma and Battle of the Sexes games, respectively, and truthfully communicate in sender-receiver games. Proofs and simulations are provided in appendices.
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Feher, Dennis Claudy. "A synthesis of Behavioural Economics and Minsky’s Financial Instability Hypothesis: An agent-based simulation exploration of satisficing behaviours in a complex financial economy." Thesis, The University of Sydney, 2019. https://hdl.handle.net/2123/21804.
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A review of the economics and finance literature from the early 1900’s until the current period shows a struggle to articulate the role of human behaviours within complex financial systems. Minsky’s Financial Instability Hypothesis (FIH) has been identified as providing the most plausible foundation for articulating the unstable behaviours driven by individuals, capitalists and financial institutions. However, inasmuch as Minsky has provided a means to identify the macro phenomena, a key missing link is modelling the behaviours of the economic agents that make up the FIH: how such agents engage in decision making, and the transmission of desires across the population that in turn drive the macro outcomes articulated by Minsky. This thesis draws upon the domain of behavioural economics developed by Kahneman & Tversky of System 1 (rapid) and System 2 (deeper) thinking and decision making, and is based on the interplay of information, experience, history, and the competition between the two systems. System 1 is an instantaneous reaction, whilst System 2 is a measured approach drawing upon knowledge and experience. Herbert A. Simon contributes the concept of “Bounded Rationality”: the ability to make decisions based on limited information and the speed at which such information needs to be processed. The key aim of this thesis is to arrive at a synthesis between behavioural economics and Minsky’s Financial Instability Hypothesis creating a behavioural framework containing both theoretical spheres (noted as the FIHB, a behavioural augmentation of the FIH). The FIHB will be illustrated in the context of Agent Based Modelling (ABM), which allows for conclusions that may not have been thought of within its original economic context. ABM methodology allows for insights on how agents adapt to their environment, and observe how changes in behaviours and influences on the economic agents (through system or population behaviours) feedback to overall environment changes. Through varying the initial conditions of the agent population for leverage, asset, consumption, employment and population conditions, we are able to observe changes to Minsky’s definitions of investment and consumption demand (and ultimately effective demand), through the functions of System 1 and System 2 behaviours.
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Lee, Penagos Luis Alejandro. "Understanding behaviour through the lens of bounded rationality : experiments with human and artificial agents." Thesis, University of Nottingham, 2017. http://eprints.nottingham.ac.uk/42418/.
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Mitzkewitz, Michael [Verfasser]. "Theories of bounded and unbounded rationality in games of conflict and coordination / Michael Mitzkewitz." Magdeburg : Universitätsbibliothek, 2018. http://d-nb.info/1159954879/34.
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Richters, Oliver [Verfasser]. "Between bounded rationality and economic imperatives : essays on out-of-equilibrium dynamics / Oliver Richters." Kiel, 2020. http://d-nb.info/1225681227/34.
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