University of Zurich, Department of Economics, Zurich
We show that economic decisions in strategic settings are co-determined by multiple behavioral rules. A simple model of intra-individual behavioral heterogeneity predicts testable differences depending on whether rules share a common prescription (alignment) or not (conflict), a classification which is ex ante observable. The predictions include non-trivial response time interactions reflecting the nature of the underlying processes, hence the model is not an as if explanation. In a laboratory experiment and two replications on Cournot oligopolies, we find direct evidence showing that decisions arise from the interaction between a deliberative myopic best reply rule and a more intuitive imitative rule.
multiple behavioral rules Cournot oligopoly best reply imitation reinforcement