Limited Foresight Equilibrium

• 成果类型: Article
• 署名作者: Rampal, Jeevant
• 署名单位: Indian Institute of Management (IIM System); Indian Institute of Management Ahmedabad; Indian Institute of Management (IIM System); Indian Institute of Management Ahmedabad; Indian Institute of Management (IIM System); Indian Institute of Management Ahmedabad
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2022.01.001
• 发表日期: 2022
• 页码: 166-188
• 关键词: Foresight; Sequential equilibrium; Sequential bargaining; centipede game

摘要

This paper models a scenario where finite perfect-information games are distorted in two ways. First, each player can have different possible levels of foresight, where foresight is a particular number of future stages that the player can observe/understand from each of her moves. In particular, each player's foresight is allowed to be limited or insufficient to observe the entire game from each move. Second, there is uncertainty about each opponent's foresight. I define the Limited Foresight Equilibrium (LFE) for this model. An LFE specifies how limited-foresight players' strategies and beliefs about opponents' foresight evolve as they move through the stages of the game. I show the existence of LFE and describe its other properties. I show that in LFE limited-foresight players follow simple heuristics for beliefs and actions. As applications, LFE is shown to rationalize experimental findings on Sequential Bargaining and the Centipede game. (C) 2022 Elsevier Inc. All rights reserved.