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Logit dynamics: a model for bounded rationality

Logit dynamics: a model for bounded rationality Logit Dynamics: A Model for Bounded Rationality DIODATO FERRAIOLI Universit´ Paris Dauphine e We describe logit dynamics, which are used to model bounded rationality in games, and their related equilibrium concept, the logit equilibrium. We also present some results about the convergence time of these dynamics and introduce a suitable approximation of the logit equilibrium. We conclude by describing some interesting future extensions to logit dynamics. Categories and Subject Descriptors: J.4 [Social and Behavioral Sciences]: Economics General Terms: Theory, Economics, Performance Additional Key Words and Phrases: Bounded Rationality, Equilibrium Concept, Game Dynamics 1. INTRODUCTION Classical Game Theory assumes that agents have complete knowledge of the game (they know all the players, their set of strategies and their utility functions and they know that other players know, and they know that others know that they know, etc.). It also assumes the players have unlimited computational power to select a strategy that maximizes their utility given the strategies played by other players. However, in many cases players' decisions can be influenced by limited knowledge and limited computational capabilities. Thus, to have a more precise description of phenomena emerging in these settings we need a model that can capture the behavior http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png ACM SIGecom Exchanges Association for Computing Machinery

Logit dynamics: a model for bounded rationality

ACM SIGecom Exchanges , Volume 12 (1) – Jun 1, 2013

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Publisher
Association for Computing Machinery
Copyright
Copyright © 2013 by ACM Inc.
ISSN
1551-9031
DOI
10.1145/2509013.2509018
Publisher site
See Article on Publisher Site

Abstract

Logit Dynamics: A Model for Bounded Rationality DIODATO FERRAIOLI Universit´ Paris Dauphine e We describe logit dynamics, which are used to model bounded rationality in games, and their related equilibrium concept, the logit equilibrium. We also present some results about the convergence time of these dynamics and introduce a suitable approximation of the logit equilibrium. We conclude by describing some interesting future extensions to logit dynamics. Categories and Subject Descriptors: J.4 [Social and Behavioral Sciences]: Economics General Terms: Theory, Economics, Performance Additional Key Words and Phrases: Bounded Rationality, Equilibrium Concept, Game Dynamics 1. INTRODUCTION Classical Game Theory assumes that agents have complete knowledge of the game (they know all the players, their set of strategies and their utility functions and they know that other players know, and they know that others know that they know, etc.). It also assumes the players have unlimited computational power to select a strategy that maximizes their utility given the strategies played by other players. However, in many cases players' decisions can be influenced by limited knowledge and limited computational capabilities. Thus, to have a more precise description of phenomena emerging in these settings we need a model that can capture the behavior

Journal

ACM SIGecom ExchangesAssociation for Computing Machinery

Published: Jun 1, 2013

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