Rationality, Inaccurate Mental Models, and Self-Confirming Equilibrium: A New Understanding of the American Revolution

Rational choice theorists have long been ambivalent about the rationality postulate. Although many agree that humans have imperfect foresight and inaccurate understandings of the world within which they act, no satisfactory approach relaxing the rationality postulates exists. In this article, we apply a new method that allows us to model directly rational action when agents have incomplete or inaccurate mental models of their world. In particular, we utilize the game theoretic notion of self-confirming equilibrium. The self-confirming equilibrium framework allows us to model an environment where a player’s predictions about one another’s behavior are inaccurate. It also allows us to model a common aspect of disputes; viz., that both sides believe they are acting reasonably while the other side is acting unreasonably. Finally, the approach allows a type of surprise in which a player’s mis-conjectures about another’s behavior results in behavior that was not anticipated. We apply this framework to the problem of the American Revolution, helpin