We study the strategic advantages of following rules of thumb that bundle different games together (called rule rationality) when this may be observed by one's opponent. We present a model in which the strategic environment determines which kind of rule rationality is adopted by the players. We apply the model to characterize the induced rules and outcomes in various interesting environments. Finally, we show the close relations between act rationality and “Stackelberg stability” (no player can earn from playing first).
CitationInternational Economic Review, 2016, 57 (3), pp. 997-1026
Author affiliation/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/Department of Economics
VersionAM (Accepted Manuscript)
Published inInternational Economic Review
PublisherWiley for 1. Osaka University, Institute of Social and Economic Research Association 2. University of Pennsylvania, Economics Department
NotesFollowing the embargo period the above license applies.