Many experiments have shown that human subjects do not necessarily behave in line with game theoretic assumptions and solution concepts. The reasons for this non–conformity are multiple. In this paper we study the argument whether a deviation from game theory is because subjects are rational, but doubt that others are rational as well, compared to the argument that subjects, in general, are bou...

This is an investigation into the behavioral and experimental support for different epistemic conditions that together imply that players are to play according to Nash equilibrium. It employs strategic choice data from a carefully chosen set of ring-network games to obtain individual-level estimates of the following three epistemic conditions: rationality; beliefs about the rationality of other...

Our aim is to study the set of K-rational expressions describing rational series. More precisely we are concerned with the definition of quotients of this set by coarser and coarser congruences which lead to an extension – in the case of multiplicities – of some classical results stated in the Boolean case. In particular, multiplicity analogues of the well known theorems of Brzozowski and Antim...

We define a “hot potato” to be an exchange good which may be traded a finite number of times, and which becomes a bad if and when it can no longer be exchanged. Under standard assumptions of rationality and common knowledge, it is easy to show that no rational actor would freely accept a hot potato good, irrespective of the magnitude of the good’s exchange payoff or its last-holder penalty. Bou...

Self-deception is a special kind of motivational dominance in belief-formation. We develop criteria which set paradigmatic self-deception apart from related phenomena of auto-manipulation such as pretense and motivational bias. In self-deception rational subjects defend or develop beliefs of high subjective importance in response to strong counter-evidence. Self-deceivers make or keep these bel...

We investigate the extent to which the “bubbles” and “crashes” in the experimental asset markets are due to individual irrationality and lack of common knowledge of rationality. We do so by comparing between the forecasted prices initially submitted by subjects in two market environments: (a) All the six traders are human subjects (6H) and (b) One human subject is interacting with five rational...

We are the first paper to analyse and confirm the existence and extent of rational informational herding and rational informational contrarianism in a financial market experiment, and to compare and contrast these with the equivalent irrational phenomena. In our study, subjects generally behaved according to benchmark rationality. Moreover, traders who should herd or be contrarian in theory are...