The use of bounded rationality in explaining economic phenomena has attracted growing attention. In spite of this, there is still considerable disagreement regarding the meaning of bounded rationality. Basov (2005) argues that when modeling boundedly rational behaviour it is desirable to start...

Despite the pervasiveness of reciprocal behavior, it has received little attention in the economic literature. In this paper, I consider an evolutionary model of reciprocity. The main findings of this paper are that evolution can support reciprocal behavior for the fraction of population, which...

I replace the assumption that an agent makes an optimal choice by an assumption that the agent executes a computational algorithm directed at finding a choice that is good at the time the choice is made. The algorithm utilizes the individual's own information, and information about choices of...

This paper develops a model of individual adjustment subject to mistakes. In this case when mistakes are assumed i.i.d., this process produces a probability distribution of agents decision whose evolution is determined by Fokker-Planck equation. This distribution converges to the unique,...

This paper develops a theoretical framework for analyzing incentive schemes under bounded rationality. It starts from a standard principal-agent model and then superimposes an assumption of boundedly rational behavior on the part of the agent. Boundedly rational behavior is modeled as an...

In this paper we develop a formal model of the optimal financing of research projects, when the projects differ in both their success probability and the cost of undertaking. We show that in the benchmark case of publicly observable costs the first best can be achieved. If the costs are private...

In this paper I propose a model where social skills of a manager signal the workers that their e¤ort is productive. In this model …rms with a high productivity of e¤ort hire a socially skilled manager and pay higher wages, and workers hired by these …rms exert higher e¤ort. In a broader...

In this paper I consider a model of coexisting moral hazard and adverse selection, similar to one considered by Guesnerie, Picard, and Rey (1989). I provide an explicit solution for the optimal incentive scheme in the case, when the effort is observed with a normally distributed error. The main...

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