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Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games

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  • Vincent P. Crawford

Abstract

Harstad and Selten’s article in this forum performs a valuable service by highlighting the dominance of optimization-based models over boundedly rational models in modern microeconomics, and questioning whether optimization-based models are a better way forward than boundedly rational models. This article complements Rabin’s response to Harstad and Selten, focusing on modeling strategic behavior. I consider Harstad and Selten’s examples and proposed boundedly rational models in the light of modern behavioral economics and behavioral game theory, commenting on the challenges that remain and the most promising ways forward.

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  • Vincent P. Crawford, 2013. "Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 512-527, June.
    • Handle: RePEc:aea:jeclit:v:51:y:2013:i:2:p:512-27
    Note: DOI: 10.1257/jel.51.2.512
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    More about this item

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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