Algorithmic Rationality: Game Theory with Costly Computation
arXiv:1412.2993
Abstract
We develop a general game-theoretic framework for reasoning about strategic agents performing possibly costly computation. In this framework, many traditional game-theoretic results (such as the existence of a Nash equilibrium) no longer hold. Nevertheless, we can use the framework to provide psychologically appealing explanations of observed behavior in well-studied games (such as finitely repeated prisoner's dilemma and rock-paper-scissors). Furthermore, we provide natural conditions on games sufficient to guarantee that equilibria exist.
To appear, Journal of Economic Theory. Has significant overlap with "Game Theory with Costly Computation" (arXiv:0809.0024), which is a preliminary version of portions of this paper