From Rationality to Irrationality : Dynamic Interacting Structures

Gosselin, Pierre and Lotz, Aïleen and Wambst, Marc (2015): From Rationality to Irrationality : Dynamic Interacting Structures.

Abstract

This article presents a general method to solve dynamic models of interactions between multiple strategic agents that extends the static model studied previously by the authors. It describes a general model of several interacting agents, their domination relations as well as a graph encoding their information pattern. It provides a general resolution algorithm and discusses the dynamics around the equilibrium. Our model explains apparent irrational or biased individual behaviors as the result of the actions of several goal-specific rational agents. Our main example is a three-agent model describing "the conscious", "the unconscious", and "the body". We show that, when the unconscious strategically dominates, the equilibrium is unconscious-optimal, but body and conscious-suboptimal. In particular, the unconscious may drive the conscious towards its goals by blurring physical needs. Our results allow for a precise account of agents' time rate preference. Myopic behavior among agentsleads to oscillatory dynamics : each agent, reacting sequentially, adjusts its action to undo other agents' previous actions. This describes cyclical and apparently inconsistent or irrational behaviors in the dual agent. This cyclicality is present when agents are forward-looking, but can be dampened depending on the conscious sensitivity to other agents' actions.

• Item Type: MPRA Paper
• Language: English
• Keywords: dual agent; conscious and unconscious, rationality; multi-rationality; emotions; choices and preferences; multi-agent model; consistency; game theory; strategical advantage.
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology > B41 - Economic Methodology; D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design

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