Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56122
Authors: 
Kets, Willemien
Voorneveld, Mark
Year of Publication: 
2005
Series/Report no.: 
SSE/EFI Working Paper Series in Economics and Finance 590
Abstract: 
Behavioral economics provides several motivations for the common observation that agents appear somewhat unwilling to deviate from recent choices: salience, inertia, the formation of habits, the use of rules of thumb, or the locking in on certain modes of behavior due to learning by doing. This paper provides discrete-time adjustment processes for strategic games in which players display precisely such a bias towards recent choices. In addition, players choose best replies to beliefs supported by observed play in the recent past, in line with much of the literature on learning. These processes eventually settle down in the minimal prep sets of Voorneveld (2004, 2005).
Subjects: 
adjustment
learning
minimal prep sets
behavioral bias
salience
JEL: 
C72
D83
Document Type: 
Working Paper

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