Game Theory in Behavioral Science: How Bounded Rationality Transforms the Traditional Game-Theoretical Models

Abstract

Economists and sociologists have applied classical and evolutionary game theory to the human context. Players' actions in laboratory experiments or daily life, however, do not always conform to predictions drawn from the theories, especially on an individual basis. Thus, in recent years, economists have focused greater attention on behavioral game theory, in which players are assumed to be boundedly rational. This paper aims to illustrate how bounded rationality is modeled in game-theoretic models, as well as how behaviors can be modeled in long-term games.