Algorithmic rationality: game theory with costly computation
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Abstract: We develop a general game-theoretic framework for reasoning about strategic agents performing possibly costly computation. In this framework, many traditional game-theoretic results (such as the existence of a Nash equilibrium) no longer hold. Nevertheless, we can use the framework to provide psychologically appealing explanations of observed behavior in well-studied games (such as finitely repeated prisoner's dilemma and rock-paper-scissors). Furthermore, we provide natural conditions on games sufficient to guarantee that equilibria exist.
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