Bounded Versus Unbounded Rationality: The Tyranny of the Weak

Abstract : We examine the case of a two-person repeated game played by a boundedly rational player versus an unboundedly rational opponent. The former is restricted to strategies which are implementable by connected finite automata. It is shown that the "rational" player has a dominant strategy, and that in some cases the "weaker" (boundedly rational) player may exploit this fact to "blackmail" him. It is also shown that for a repeated zero-sum game, the rational player has a strategy which drives the automaton player's limit payoff down to his security (maxmin) level, even if he may choose any finite automaton.
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Games and Economic Behavior, Elsevier, 1989, vol. 1, pp. 213-221. 〈10.1016/0899-8256(89)90009-2〉
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Itzhak Gilboa, Dov Samet. Bounded Versus Unbounded Rationality: The Tyranny of the Weak. Games and Economic Behavior, Elsevier, 1989, vol. 1, pp. 213-221. 〈10.1016/0899-8256(89)90009-2〉. 〈hal-00753239〉

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