We present a model of boundedly rational play in single-shot 2 × 2 games. Players choose strategies based on the perceived salience of their own payoffs and, if own-payoff salience is uninformative, on the perceived salience of their opponent's payoffs. When own payoffs are salient, the model's...

We analyze subjects' eye movements while they make decisions in a series of one-shot games. The majority of them perform a partial and selective analysis of the payoff matrix, often ignoring the payoffs of the opponent and/or paying attention only to specific cells. Our results suggest that...

To address the impact of regulation on ethical concerns of consumers, we study the example of minimum wages. In our experimental market, consumers have monopsony power, firms set prices and wages, and workers are passive recipients of a wage payment. We find that the majority of consumers...

We experimentally investigate, in an unstructured bargaining environment with commonlyknown money payoffs, the Attraction Effect and Compromise Effect (AE and CE) in bargaining,namely a tendency for bargainers to agree to an intermediate option (CE), or to an optionthat dominates another option...

This paper analyzes a boundedly rational decision maker who is uncertain about his preference and faces the following trade-off: adding a good to the choice set has a positive option value but increases the complexity of the choice problem. The increased complexity is modeled as a reduction of...

An agent wants to derive her belief over outcomes based on past observations collected in her database (memory). There is well establish evidence in the psychology and marketing literature that agents consistently fail (or choose not) to process all available information. An agent might be...

We study an extension of the model of Rubinstein (1993) to two firms, competing in a market with consumers who are boundedly rational with respect to processing information. The cognitive bound forces customers to partition the price space. Rubinstein shows that a monopolist is able to earn a...