Bounded rationality and perception: strategies for a confusing world

Recent game experiments have revealed that individual variation in behaviour across strategically distinct situations is correlated, and that these behavioural patterns are linked to personality traits [13] [4]. Classic experiments demonstrate that behaviour in games is determined as much by the framing of the game as by the strategic fundamentals of the game, that is the underlying pay-off matrix [2]. Framing effects are not restricted to the explicit framing of the experimenter but also include the implicit cultural framing of the participant[8]. There is also strong experimental evidence that the typical human response to a novel decision is not a strategic analysis of the situation. Instead the novel decision is linked by analogy to a different decision familiar to the decision maker[6]. The cultural context, personality traits, and personal history of the decision maker prescribe a behaviour for the familiar situation, which the decision maker then matches to the closest available behaviour in the novel situation. Taken together these facts suggest that considering the evolutionary stable strategy of any one particular game will aid the understanding of human behaviour in frequently experienced and easily recognizable situations, but will be of severely limited use in rare or difficult to distinguish situations. Indeed recent experiments confirm that in multi-game situations where games are difficult to distinguish from one another or where individual games are encountered infrequently, behaviour is not predicted by conventional evolutionary game theoretic analysis, but rather behaviour can only be understood in terms of spill over effects between games [9] [7]. To understand these complex situations requires a holistic modeling approach which takes into account a wide variety of distinct games, the processes by which individuals learn (or fail to learn) to distinguish between games, and the processes by which individuals adjust their behaviour across classes of games they perceive as similar. Specifically, this paper uses an agent based simulation approach to model the way in which perceptual similarities, strategic details, and learning processes interact to determine the stable behavioral patterns of a population. In this model a population of agents develops within an environment consisting of a variety of strategic situations, i.e. games. These games consist of both a perceptual and a strategic component. Agents are primarily defined by a stimulus-response map which determines behaviour in a game as a function of the perceptual component of that game. Agents do not receive direct information concerning the strategic component of a game but rather learn by experience which behavior to employ based exclusively on the perceptual cues of the game. The space of perceptual cues is structured so that between any two situations there is the possibility of varying degrees of perceptual similarity across several dimensions of comparison. The learning process, which modifies an agent’s stimulus-response map, is such that in perceptually similar situations learning to engage in different behaviours is relatively difficult as compared to learning to apply the same behaviour. An additional result of a learning process structured in this way is that behaviour in a novel situation is determined by the novel situation’s perceptual similarities to previously experienced situations. This holistic theoretical framework