Most important economic decision problems are sequential, and thus naturally represented as Markov Decision Problems (MDP). After reviewing the theory of MDPs, the applicability of MDPs to real-life sequential decisions appears impractical. The central question addressed in this essay is how...

A stylized fact from laboratory experiments is that there is much heterogeneity in human behavior. We present and demonstrate a computationally practical non-parametric Bayesian method for characterizing this heterogeneity. In addition, we define the concept of behaviorally distinguishable...

We prove that every well-defined behavioral rule can be interpreted as being optimization-based. Therefore, the categorical distinction between boundedly-rational behavior and optimization-based behavior asserted by Harstad and Selten (2013) does not entail a substantive difference