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We propose a multi-agent based computational framework for modeling decision-making and strategic interaction at micro level for smart vehicles in a smart world. The concepts of Markov game and best response dynamics are heavily leveraged. Our aim is to make the framework conceptually sound and computationally practical for a range of realistic applications, including micro path planning for autonomous vehicles. To this end, we first convert the would-be stochastic game problem into a closely related deterministic one by introducing risk premium in the utility function for each individual agent. We show how the sub-game perfect Nash equilibrium of the simplified deterministic game can be solved by an algorithm based on best response dynamics. In order to better model human driving behaviors with bounded rationality, we seek to further simplify the solution concept by replacing the Nash equilibrium condition with a heuristic and adaptive optimization with finite look-ahead anticipation. In addition, the algorithm corresponding to the new solution concept drastically improves the computational efficiency. To demonstrate how our approach can be applied to realistic traffic settings, we conduct a simulation experiment: to derive merging and yielding behaviors on a double-lane highway with an unexpected barrier. Despite assumption differences involved in the two solution concepts, the derived numerical solutions show that the endogenized driving behaviors are very similar. We also briefly comment on how the proposed framework can be further extended in a number of directions in our forthcoming work, such as behavioral calibration using real traffic video data, computational mechanism design for traffic policy optimization, and so on.