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Games 2010, 1(1), 53-65; doi:10.3390/g1010053
Article

(Un)Bounded Rationality in Decision Making and Game Theory – Back to Square One?

1,*  and 2
1 Max Planck Institute of Economics, Kahlaische Straße 10, 07745 Jena, Germany 2 Frankfurt School of Finance and Management, Sonnemannstraße 9-11, 60314 Frankfurt am Main, Germany
* Author to whom correspondence should be addressed.
Received: 18 February 2010 / Revised: 15 March 2010 / Accepted: 19 March 2010 / Published: 23 March 2010
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Abstract

Game and decision theory start from rather strong premises. Preferences, represented by utilities, beliefs represented by probabilities, common knowledge and symmetric rationality as background assumptions are treated as “given.” A richer language enabling us to capture the process leading to what is “given” seems superior to the stenography of decision making in terms of utility cum probability. However, similar to traditional rational choice modeling, boundedly rational choice modeling, as outlined here, is far from being a “global” theory with empirical content; rather it serves as a tool to formulate “local” theories with empirical content.
Keywords: bounded rationality; methodology of decision; game theory bounded rationality; methodology of decision; game theory
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Güth, W.; Kliemt, H. (Un)Bounded Rationality in Decision Making and Game Theory – Back to Square One? Games 2010, 1, 53-65.

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