A model of "satisficing" behavior in the repeated Prisoners Dilemma is studied. Each player has an aspiration at each date, and takes an action. [S]he switches from the action played in the previous period only if the achieved payoff fell below the aspiration level (with a probability that...

This paper proposes an aspiration-based model for (anonymous) cooperation where a large population of agents are re-matched every period to playa Prisoner's Dilemma. At each point in time, agents hold a certain common aspiration level which is updated on the basis of population-average...

The aim of this paper is to show the relation among equilibria in models with different levels of rationality. The different levels of rationality are defined in terms of the number of iterations that a player can perform with a simple rule for updating beliefs. It is shown that the rule...

Let µ be a rational distribution over a finite alphabet, and ( ) be a n-periodic sequences which first n elements are drawn i.i.d. according to µ. We consider automata of bounded size that input and output at stage t. We prove the existence of a constant C such that, whenever , with...

In this paper, present a calibrated model of life-cycle occupation and investment decisions where households choose between paid work and entrepreneurship and conditional on the latter how much of their savings to invest in their business. The returns to entrepreneurial activity are modeled...

This paper presents a model of network formation with costly links. We endogenize the amount of cost born by each player involved in a bilateral link by considering that these shares result from bargaining. We analyze this feature in a context of coordination games. We show that, if the cost of...

Equilibrium selection in the Nash demand game is investigated in a learning context with persistent randomness. I adopt a matching framework similar to Kandori, Mailath and Rob (1993) and assume that individuals belong to populations of different sizes. Despite the myopic behavior of...

This paper presents a model in which players interact via the formation of costly links and the benefits of bilateral interactions are determined by a coordination game. A novel contribution of this paper is that the fraction of the cost borne by each player involved in a bilateral link is not...

Here I provide a model that gives some insights regarding questions about actual economic behavior. I take as a source for stylized facts the experiments conducted by Marimón and Sunder as reported in Econometrica, 1993, in which it is shown that people initially do not behave according to the...