We study the strategic advantages of following rules of thumb that bundle different games together (called rule rationality) when this may be observed by one's opponent. We present a model in which the strategic environment determines which kind of rule rationality is adopted by the players. We apply the model to characterize the induced rules and outcomes in various interesting environments. Finally, we show the close relations between act rationality and “Stackelberg stability” (no player can earn from playing first).
Bibliographical notePublisher Copyright:
© (2016) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association