Bounded Rationality and
Strategy Learning using Neural
Networks.
Simnan Abbas
Nash Equilibrium in 33 Games
• What is a Nash Equilibrium?
• Pure Strategy Nash Equilibrium
• No Mixing
9, 0 2, 7 6, 2
8, 9 1, 7 5, 3
0, 0 7, 5 9, 0
Equilibrium strategy for one Player: 7, 5
The Neural Network
Input Layer
18 Nodes
Hidden Layer
10 Nodes
TanH Activation Function
Momentum
Output Layer
2 Nodes
(0,0) means plays 0st strategy
(0,1) means plays 1st strategy
(1,0) means plays 2st strategy
Back-Propagation Component
Training
MSE versus Epoch
0.6
0.5
MSE
0.4
0.3
Training MSE
0.2
0.1
0
1
100
199
298
397
496
Epoch
595
694
793
892
991
Testing and Conclusion
• 70% accuracy on games never seen
before
• Payoff dominance
• Implications to bounded rationality,
laboratory subjects