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AbstractAbstract: Bounded rationality requires assumptions about ways in which rationality is constrained and agents form their expectations. Evolutionary schemes have been used to model beliefs dynamics, with agents choosing endogenously among a limited number of beliefs heuristics according to their relative performance. This work shows that arbitrarily constraining the beliefs space to a finite (small) set of possibilities can generate artificial equilibria that can be stable under evolutionary dynamics. Only when “enough” heuristics are available are beliefs in equilibrium not artificially constrained. I discuss these findings in light of an alternative approach to modelling beliefs dynamics, namely, adaptive learning.
CitationJournal of Evolutionary Economics, volume 31, issue 2, page 505-532
PublisherSpringer Berlin Heidelberg
DescriptionFrom Springer Nature via Jisc Publications Router
History: registration 2020-06-11, pub-electronic 2020-06-29, online 2020-06-29, pub-print 2021-04
Publication status: Published