Bounded versus unbounded rationality: The tyranny of the weak

Itzhak Gilboa*, Dov Samet

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


We examine the case of a two-person repeated game played by a boundedly rational player versus an unboundedly rational opponent. The former is restricted to strategies which are implementable by connected finite automata. It is shown that the "rational" player has a dominant strategy, and that in some cases the "weaker" (boundedly rational) player may exploit this fact to "blackmail" him. It is also shown that for a repeated zero-sum game, the rational player has a strategy which drives the automaton player's limit payoff down to his security (maxmin) level, even if he may choose any finite automaton.

Original languageEnglish
Pages (from-to)213-221
Number of pages9
JournalGames and Economic Behavior
Issue number3
StatePublished - Sep 1989
Externally publishedYes


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