Related papers: Bubbles are rational
The relationships between game theory and quantum mechanics let us propose certain quantization relationships through which we could describe and understand not only quantum but also classical, evolutionary and the biological systems that…
We consider a dynamical approach to sequential games. By restricting the convertibility relation over strategy profiles, we obtain a semi-potential (in the sense of Kukushkin), and we show that in finite games the corresponding restriction…
The aim of this study is to formally express awareness for modeling practical agent communication. The notion of awareness has been proposed as a set of propositions for each agent, to which he/she pays attention, and has contributed to…
This paper argues that the finite horizon paradox, where game theory contradicts intuition, stems from the limitations of standard number systems in modelling the cognitive perception of infinity. To address this issue, we propose a new…
The game theory techniques are used to find the equilibrium of a market. Game theory refers to the ways in which strategic interactions among economic agents produce outcomes with respect to the preferences (or utilities) of those agents,…
The notion that economies should normally be in equilibrium is by now well-established; equally well-established is that economies are almost never precisely in equilibrium. Using a very general formulation, we show that under dynamics that…
Consider a set of agents who play a network game repeatedly. Agents may not know the network. They may even be unaware that they are interacting with other agents in a network. Possibly, they just understand that their payoffs depend on an…
We introduce a set-valued solution concept, M equilibrium, to capture empirical regularities from over half a century of game-theory experiments. We show M equilibrium serves as a meta theory for various models that hitherto were considered…
We derive robust predictions in games involving flexible information acquisition, also known as rational inattention (Sims 2003). These predictions remain accurate regardless of the specific methods players employ to gather information.…
We study a class of heterogeneous agent-based models which are based on a basic set of principles, and the most fundamental operations of an economic system: trade and product transformations. A basic guiding principle is scale invariance,…
Most work in game theory assumes that players are perfect reasoners and have common knowledge of all significant aspects of the game. In earlier work, we proposed a framework for representing and analyzing games with possibly unaware…
We argue that whether the universe is infinite or finite is less crucial than usually supposed. Paradoxes of repeating behaviour in the infinite, or eternal inflationary, universe can be alleviated by a realistic definition of differing…
We study the concept of financial bubble in a market model endowed with a set of probability measures, typically mutually singular to each other. In this setting we introduce the notions of robust bubble and robust fundamental value in a…
While game theory has been transformative for decision-making, the assumptions made can be overly restrictive in certain instances. In this work, we investigate some of the underlying assumptions of rationality, such as mutual consistency…
We study repeated games where players use an exponential learning scheme in order to adapt to an ever-changing environment. If the game's payoffs are subject to random perturbations, this scheme leads to a new stochastic version of the…
We apply Blackwell optimality to repeated games. An equilibrium whose strategy profile is sequentially rational for all high enough discount factors simultaneously is a Blackwell (subgame-perfect, perfect public, etc.) equilibrium. The bite…
We propose two rational expectation models of transient financial bubbles with heterogeneous arbitrageurs and positive feedbacks leading to self-reinforcing transient stochastic faster-than-exponential price dynamics. As a result of the…
We consider solutions of normal form games that are invariant under strategic equivalence. We consider additional properties that can be expected (or be desired) from a solution of a game, and we observe the following: - Even the weakest…
We investigate Kantian equilibria in finite normal form games, a class of non-Nashian, morally motivated courses of action that was recently proposed in the economics literature. We highlight a number of problems with such equilibria,…
Conventional noncooperative game theory hypothesizes that the joint strategy of a set of players in a game must satisfy an "equilibrium concept". All other joint strategies are considered impossible; the only issue is what equilibrium…