thus to display inertial behavior): A cognitive bias referred to as cognitive inertia and a bound on rationality which we …

In our laboratory experiment, subjects, in sequence, have to predict the value of a good. We elicit the second subject … updating, incompatible with Bayesianism, can be explained by multiple priors on the predecessor's rationality and a … generalization of the Maximum Likelihood Updating rule. In another experiment, we directly test this theory and find support for it. …