and Jörgen W. Weibull
Maria Saez-Marti: Dept. of Economics, Stockholm School of Economics, Postal: P.O. Box 6501, SE-113 83 Stockholm, Sweden
Jörgen W. Weibull: Dept. of Economics, Stockholm School of Economics, Postal: P.O. Box 6501, SE-113 83 Stockholm, Sweden
Abstract: In the models of Young (1993a, b), boundedly rational individuals are recurrently matched to play a game, and they play myopic best replies to the recent history of play. It could therefore be an advantage to instead play a myiopic best reply to the myopic best reply, something boundedly rational players might conceivably also do. We investigate this possibility in the context of Young's (1993b) bargaining model. It turns out that "cleverness" in this respect indeed does have an advantage in some cases. However, if all individuals are equally informed about past play, in a statistical sense, then the Nash bargaining solution remains the unique long-run outcome when the mutation rate goes to zero.
11 pages, November 10, 1998
Note: Published in Journal of Economic Theory, 1999, Vol 86, No 2.
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