Premium
Equilibrium Selection, Similarity Judgments, and the “Nothing to Gain/Nothing to Lose” Effect
Author(s) -
Leland Jonathan W.
Publication year - 2013
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/bdm.1772
Subject(s) - nothing , similarity (geometry) , selection (genetic algorithm) , mathematical economics , economics , microeconomics , econometrics , computer science , artificial intelligence , epistemology , philosophy , image (mathematics)
Rubinstein and Leland have both demonstrated that many observed violations of expected and discounted utility can be explained if people employ similarity judgments to make choices. In this paper, I show that this decision process also explains which equilibria will be selected in single‐shot games with multiple equilibria and implies that play in games will be associated with anomalies in risky choice. Data supporting these predictions are presented. Copyright © 2012 John Wiley & Sons, Ltd.