Algorithmic rationality: Game theory with costly computation

Joseph Y. Halpern, Rafael Pass

Research output: Contribution to journalArticlepeer-review


We develop a general game-theoretic framework for reasoning about strategic agents performing possibly costly computation. In this framework, many traditional game-theoretic results (such as the existence of a Nash equilibrium) no longer hold. Nevertheless, we can use the framework to provide psychologically appealing explanations of observed behavior in well-studied games (such as finitely repeated prisoner's dilemma and rock-paper-scissors). Furthermore, we provide natural conditions on games sufficient to guarantee that equilibria exist.

Original languageEnglish
Pages (from-to)246-268
Number of pages23
JournalJournal of Economic Theory
StatePublished - 1 Mar 2015
Externally publishedYes


  • Bounded rationality
  • Costly computation

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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