Bounded computational capacity equilibrium
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Abstract: We study repeated games played by players with bounded computational power, where, in contrast to Abreu and Rubisntein (1988), the memory is costly. We prove a folk theorem: the limit set of equilibrium payoffs in mixed strategies, as the cost of memory goes to 0, includes the set of feasible and individually rational payoffs. This result stands in sharp contrast to Abreu and Rubisntein (1988), who proved that when memory is free, the set of equilibrium payoffs in repeated games played by players with bounded computational power is a strict subset of the set of feasible and individually rational payoffs. Our result emphasizes the role of memory cost and of mixing when players have bounded computational power.
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Cites work
- scientific article; zbMATH DE number 4202070 (Why is no real title available?)
- scientific article; zbMATH DE number 1054720 (Why is no real title available?)
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- Finite automata play a repeated extensive game
- Finite automata play the repeated prisoner's dilemma
- Finitely repeated games with finite automata
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- Repeated games, finite automata, and complexity
- Small talk and cooperation: A note on bounded rationality
- Strategic entropy and complexity in repeated games
- The Structure of Nash Equilibrium in Repeated Games with Finite Automata
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Cited in
(6)- Systems of Bounded Rational Agents with Information-Theoretic Constraints
- Bounded memory folk theorem
- Bounded computational capacity equilibrium in repeated two-player zero-sum games
- Excludability and Bounded Computational Capacity
- Games with Symmetric Incomplete Information and Asymmetric Computational Resources
- Equilibrium payoffs in repeated two-player zero-sum games of finite automata
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