Strategic Learning and Teaching

Abstract

Decision makers learn from experience and this learning affects their future decisions. But how? Using game theory, the authors explore how people factor in the payoffs of past decisions in their current choices. The authors introduce the concept of experience-weighted attraction (EWA) to explain how people learn from their experience. Sophisticated players can use this concept to learn which strategies work and "outguess" their rivals. And by understanding how rivals and customers learn, managers can take actions that "teach" rivals and customers what you want them to believe-reassuring partners and intimidating competitors.

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