Cognitive Resources: How Less Can Be More

Many models of rational inference view the mind as if it were a supernatural being possessing demonic powers of reason, boundless knowledge, and all of eternity for making decisions. In reality, humans act under limited time, knowledge, and computational power.Across various cognitive research programs, the premise that human information-processing capacity is limited often goes hand in hand with the belief that these limitations are nothing but a liability.They are suspected of being the culprit behind reasoning lapses and of barring us from achieving the feats of a supercomputer.

The Strategic Value of Recall

This work studies the value of two-person zero-sum repeated games in which at least one of the players is restricted to (mixtures of) bounded recall strategies. A (pure) k-recall strategy is a strategy that relies only on the last k periods of history. This work improves previous results [Lehrer 1988, Neyman-Okada 2005] on repeated games with bounded recall. We provide an explicit formula for the asymptotic value of the repeated game as a function of the stage game, the duration of the repeated game, and the recall of the agents.

Constrained School Choice: An Experimental Study

Recently several school districts in the US have introduced school choice mechanisms to assign children to public schools. Chen and Sonmez (2006) report on an experimental study of three prominent mechanisms, complementing the theoretical results in favor of two of the three mechanisms. This paper shows that these results may change drastically when a real-life feature of school choice procedures is incorporated: students can only declare up to a fixed number of schools to be acceptable.

נוירו-כלכלה: אופנה או תקווה חדשה להבנת קבלת החלטות

הדוברים   ישראל אומן - האוניברסיטה העברית בירושלים ריצ'ארד אבשטיין - האוניברסיטה העברית בירושלים יצחק אהרן - אוניברסיטת בן גוריון סרג'יו הרט - האוניברסיטה העברית בירושלים יקיר לוין - אוניברסיטת בן גוריון יונתן לוינשטיין - האוניברסיטה העברית בירושלים איתמר פיטובסקי - האוניברסיטה העברית בירושלים

Another look at constructed and inherent preferences

There is a growing consensus that preferences are inherently constructive and largely determined by the task characteristics, the choice context, and the description of options. Although the fact that construction influences often play an important role is not in dispute, I argue that much of the evidence for preference construction reflects people's difficulty in evaluating absolute attribute values and tradeoffs and their tendency to gravitate to available relative evaluations.

THE 2007 NOBEL LAUREATES: THE ENGINEERING OF ECONOMICS

Leo Hurvicz, Eric Maskin and Roger Myerson shared the Nobel Prize in Economics in Dec. 2007 for their contributions to the theory of mechanism design. The field that started in a debate between liberals and socialists at the beginning of the last century emerged to be one of the most important fields of economics. Dealing primarily with the design of optimal incentives this field is often regarded as the engineering of economics. I will survey the main contributions of the three laureates and discuss briefly the persons behind them. No prior knowledge is required.

ON THE EFFICIENCY OF CATEGORIZATION IN LARGE GAMES

Inspired by the social psychology literature, we study the implications of categorical thinking on decision making in the context of a large normal-form game. Every agent has a categorization (partition) of her opponents and can only observe the average behavior in each category.

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