Satisficing Equilibrium
Abstract
In a satisficing equilibrium each agent i plays one of her top ki actions in response to the actions of the other agents. Our concept unifies models of bounded rationality and yields predictions that differ from canonical solution concepts. We study its theoretical properties and show that it provides sharp predictions, exists in most games as well as in a broad new class of economic environments, admits standard epistemic and dynamic foundations, and is empirically falsifiable.
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