Deep and shallow thinking in the long run

• 成果类型: Article
• 署名作者: Nax, Heinrich Harald; Newton, Jonathan
• 署名单位: University of Zurich; Kyoto University
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE4824
• 发表日期: 2022-11-01
• 页码: 1501-1527
• 关键词: Bounded rationality; level k thinking; EVOLUTION; C73; D81; D90

摘要

Humans differ in their strategic reasoning abilities and in beliefs about others' strategic reasoning abilities. Studying such cognitive hierarchies has produced new insights regarding equilibrium analysis in economics. This paper investigates the effect of cognitive hierarchies on long run behavior. Despite short run behavior being highly sensitive to variation in strategic reasoning abilities, this variation is not replicated in the long run. In particular, when generalized risk dominant strategy profiles exist, they emerge in the long run independently of the strategic reasoning abilities of players. These abilities may be arbitrarily low or high, heterogeneous across players, and evolving over time.