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Unformatted text preview: Page 6 1.6 Bounded Rationality When we talk in real life about games we often focus on the asymmetry between individuals in their abilities. For example, some players may have a clearer perception of a situation or have a greater ability to analyze it. These difference, which are so critical in life, are missing from game theory in its current form. To illustrate the consequences of this fact, consider the game of chess. In an actual play of chess the players may differ in their knowledge of the legal moves and in their analytical abilities. In contrast, when chess is modeled using current game theory it is assumed that the players' knowledge of the rules of the game is perfect and their ability to analyze it is ideal. Results we prove in Chapters 2 and 6 (Propositions 22.2 and 99.2) imply that chess is a trivial game for "rational" players: an algorithm exists that can be used to "solve" the game. This algorithm defines a pair of strategies, one for each player, that leads to an "equilibrium" outcome with the property that a player who...
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This note was uploaded on 09/10/2011 for the course DEFR 090234589 taught by Professor Vinh during the Spring '10 term at Aarhus Universitet, Aarhus.
- Spring '10