Ignacio Esponda, Demian Pouzo
arXiv 24 Feb 2015 · General Economics · 7 citations (OpenAlex)
arXiv:1502.06901 · PDF · DOI · OpenAlex · Extracted main text
We study Markov decision problems where the agent does not know the transition probability function mapping current states and actions to future states. The agent has a prior belief over a set of possible transition functions and updates beliefs using Bayes' rule. We allow her to be misspecified in the sense that the true transition probability function is not in the support of her prior. This problem is relevant in many economic settings but is usually not amenable to analysis by the researcher. We make the problem tractable by studying asymptotic behavior. We propose an equilibrium notion and provide conditions under which it characterizes steady state behavior. In the special case where the problem is static, equilibrium coincides with the single-agent version of Berk-Nash equilibrium (Esponda and Pouzo (2016)). We also discuss subtle issues that arise exclusively in dynamic settings due to the possibility of a negative value of experimentation.
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The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Esponda and Pouzo (2016) Berk-Nash Equilibrium: A Framework for Modeling Agents with Misspecified Models | 1.000 | 10 | 5 | 100% |
| 2 | Nyarko (1991) Learning in mis-specified models and the possibility of cycles | 0.737 | 3 | 2 | 100% |
| 3 | Freixas (1981) Optimal growth with experimentation | 0.644 | 2 | 2 | 100% |
| 4 | Koulovatianos, Mirman and Santugini (2009) Optimal growth and uncertainty: learning | 0.644 | 2 | 2 | 100% |
| 5 | Rothschild (1974) A two-armed bandit theory of market pricing | 0.644 | 2 | 2 | 100% |
| 6 | Selten (1975) Reexamination of the perfectness concept for equilibrium points in extensive games | 0.644 | 2 | 2 | 100% |
| 7 | Fudenberg, Romanyuk and Strack (2016) Active Learning with Misspecified Beliefs | 0.585 | 3 | 1 | 100% |
| 8 | Esponda (2008) Behavioral equilibrium in economies with adverse selection self | 0.511 | 2 | 1 | 100% |
| 9 | Heidhues, Koszegi and Strack (2016) Unrealistic Expectations and Misguided Learning | 0.511 | 2 | 1 | 100% |
| 10 | Sargent (1999) | 0.511 | 2 | 1 | 100% |
Showing the top 10 of 53 scored citations.