SFB 504 discussion paper 04-46

Ani Guerdjikova
Cornell University
Uris Hall 462, Ithaca, NY 14853
ag334@cornell.edu

A Note on Case-Based Optimization with a Non-Degenerate Similarity Function

Abstract:

The paper applies the ��realistic-ambitious�� rule for adaptation of the aspiration level suggested by Gilboa and Schmeidler (1996) to a situation in which the similarity between the available acts is represented by a non-degenerate function. The paper shows that the optimality result obtained by Gilboa and Schmeidler (1996) in general fails. With a concave similarity function, the best corner act is chosen in the limit. Introducing convex regions into the similarity function improves the limit choice. A sufficiently fine similarity function allows to approximate optimal behavior with an arbitrary degree of precision.

Keywords:

JEL-Classification:

Project:

C8 Eichberger

Creation date:

2004-11-24

Publication Status

Downloadable version

http://www.sfb504.uni-mannheim.de/publications/dp04-46.pdf

Download titlepage for internal use only

pdf-file

---

Direct questions and comments to our webmaster.