From Rationality to Irrationality : Dynamic Interacting Structures Report as inadecuate

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This article develops 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 agents leads 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 -

Original Title: From Rationality to Irrationality : Dynamic Interacting Structures-

Language: English-

Keywords: dual agent; conscious and unconscious, rationality; multi-rationality; emotions; choicesand preferences; multi-agent model; consistency; game theory; strategical advantage.-

Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology > B41 - Economic MethodologyD - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying PrinciplesD - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and UncertaintyD - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design-

Author: Gosselin, Pierre



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