Prepared for Trento Conference in honor of Robert Clower; published in Money, Markets and Method: Essays in Honour of Robert W. Clower, ed. P. Howitt, E. de Antoni and A. Leijonhufvud, Cheltenham: Edward Elgar, 1999.
David K. Levine
April 16, 1996
revised: December 29, 1997
Abstract: We consider an application of the stock flow model of intertemporal preference to the problem of strategic "learning about learning" with the best response dynamic. We show that when players are myopic, but not as in the usual analysis completely so, that we can find an approximate solution that is "implementable" in the sense that it does not require solving an equilibrium system. Paradoxically, in the steady state, this increase in patience and sophistication by the players generally lowers their utility.