LEARNING FROM PERSONAL-EXPERIENCE - ONE RATIONAL GUY AND THE JUSTIFICATION OF MYOPIA

The paper examines a large population analog of fictitious play in whi ch players learn from personal experience, focusing on what happens wh en a single rational player is added to the population. Because the le arning process naturally generates contagion dynamics, the rational pl ayer at times has an incentive to act nonmyopically. In 2 X 2 games th e dynamics are asymmetric and favor risk dominant equilibria. A variet y of other examples are presented. (C) 1997 Academic Press.