Date of this Version

February 2007

Document Type

Working Paper

Abstract

This paper develops a theory of inductive derivations of personal views from experiences focusing on limited trials and partial memories. The theory allows us to discuss how a player might simplify his view of a complicated situation. Two new concepts of marked information pieces and tested actions are introduced for this purpose. Each player accumulates local memories as long-term term memories up to marked pieces and tested actions, and constructs a view. At unmarked pieces, he behaves following his prescribed regular behavior pattern without thinking about it. A derived view is typically small, partial, and sometimes prejudiced relative to the original game situation. This paper studies the emergence of such views. One result is the characterization of a Nash equilibrium relative to the relevant domain of the objective game based on the limited and partial views of the individual players.

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