Rule Rationality

International Economic Review, Forthcoming.

33 Pages Posted: 1 Aug 2013 Last revised: 30 Apr 2015

See all articles by Yuval Heller

Yuval Heller

Bar Ilan University

Eyal Winter

Hebrew University of Jerusalem - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 13, 2015

Abstract

We study the strategic advantages of following rules of thumb that bundle different games together (called rule rationality) when this may be observed by one's opponent. We present a model in which the strategic environment determines which kind of rule rationality is adopted by the players. We apply the model to characterize the induced rules and outcomes in various interesting environments. Finally, we show the close relations between act rationality and “Stackelberg stability” (no player can earn from playing first).

Keywords: Bounded Rationality, commitments, categorization, value of information

JEL Classification: C72, D82

Suggested Citation

Heller, Yuval and Winter, Eyal, Rule Rationality (April 13, 2015). International Economic Review, Forthcoming., Available at SSRN: https://ssrn.com/abstract=2304183 or http://dx.doi.org/10.2139/ssrn.2304183

Yuval Heller (Contact Author)

Bar Ilan University ( email )

Dept. of Economics, Building 504
Bar Ilan University
Ramat Gan, 5290002
Israel
+972 5252 82182 (Phone)

HOME PAGE: http://https://sites.google.com/site/yuval26/

Eyal Winter

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 658 4154 (Phone)
+972 2 651 3681 (Fax)

HOME PAGE: http://www.ma.huji.ac.il/%7Emseyal/

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