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Behavioral Players in a Game

Author

Listed:
  • Suehyun Kwon
Abstract
This paper points out issues with having behavioral players together with fully rational players in a game. One example of behavioral players is naive or sophisticated players; one can study higher-order beliefs when sophistication is the first-order belief, but the paper also considers alternative ways of modelling the type space and non-Bayesian updating. The paper shows that players must have heterogeneous priors and this type of heterogeneous priors cannot be justified by acquiring private information from the common prior. Furthermore, equilibrium definitions need to be modified for games with behavioral players.

Suggested Citation

  • Suehyun Kwon, 2019. "Behavioral Players in a Game," CESifo Working Paper Series 7504, CESifo.
    • Handle: RePEc:ces:ceswps:_7504
    as

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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp7504.pdf
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    References listed on IDEAS

    as
    1. Pietro Ortoleva, 2012. "Modeling the Change of Paradigm: Non-Bayesian Reactions to Unexpected News," American Economic Review, American Economic Association, vol. 102(6), pages 2410-2436, October.
    2. John C. Harsanyi, 1967. "Games with Incomplete Information Played by "Bayesian" Players, I-III Part I. The Basic Model," Management Science, INFORMS, vol. 14(3), pages 159-182, November.
    3. Jonathan Weinstein & Muhamet Yildiz, 2007. "A Structure Theorem for Rationalizability with Application to Robust Predictions of Refinements," Econometrica, Econometric Society, vol. 75(2), pages 365-400, March.
    4. Emmanuel Farhi & Xavier Gabaix, 2020. "Optimal Taxation with Behavioral Agents," American Economic Review, American Economic Association, vol. 110(1), pages 298-336, January.
    5. Rubinstein, Ariel, 1989. "The Electronic Mail Game: Strategic Behavior under "Almost Common Knowledge."," American Economic Review, American Economic Association, vol. 79(3), pages 385-391, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    naivete; misspecified beliefs; heterogeneous priors; higher-order beliefs; equilibrium definition; Harsanyi doctrine;
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