LEARNING TO PLAY LIMITED FORECAST EQUILIBRIA

This paper provides a learning justification for limited forecast equi libria, i.e., strategy profiles such that (1) players choose their act ions in order to maximize the discounted average payoff over their hor izon of foresight as given by their forecasts and (2) forecasts are co rrect on and off the equilibrium path. The limited forecast equilibria appear to be the stochastically stable outcomes of a simple learning process involving (vanishing) trembles. (C) 1998 Academic Press.