The research question is whether players use the nominal payoff, or act as if they calculated real payoffs. If players use real payoffs and are in equilibrium, they will either choose prices of 11 and 14 (depending on which of two cost stru…theme of this paper, the model can explain when Nash equilibrium is reached surprisingly quickly (in the substitutes treatment), and can also explain when behavior is far from equilibrium (in the complements treatment). More importantly, th…Gabaix, Xavier, and David Laibson, “A Boundedly Rational Decision Algorithm,” American Economic Review, XC (May 2000), 433–438.
Gabaix, Xavier, David Laibson, Guillermo Moloche, and Stephen Weinberg, “The Allocation of Attention: Theory an…
Ernst Fehr
economist · 3 mentions across 1 reading
In this course
Ernst Fehr is an experimental economist known for research on bounded rationality and behavioral deviations from rational choice theory, particularly in pricing and equilibrium settings. The excerpts position his work within debates about when agents achieve Nash equilibrium versus exhibit systematic departures from it, with his models helping to explain the cognitive limitations and heuristics that govern real economic behavior. He appears here as part of a broader scholarly conversation, cited alongside Gabaix and Laibson, about how attention allocation and bounded rationality shape outcomes in market experiments.
Mentioned in 1 reading
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