Analogies, adaptation, and anomalies

This payer studies decision makers characterized by a stock of models, or a nalogies, who respond to strategic interactions by applying what appear to be the most suitable models: balancing the gains from more sophisticated de cisionmaking against the cost of placing heavier demands on scarce reasonin g resources. Equilibrium models will be finely tuned to interactions, leadi ng to seemingly "rational" behavior, when the interactions are sufficiently important and sufficiently distinct that a more generic model entails a pr ohibitive payoff reduction. Interactions that are infrequently encountered. relatively unimportant. or similar to other interactions may trigger seemi ngly inappropriate analogies. leading to behavioral anomalies. (C) 2001 Aca demic Press.