Biased-Belief Equilibrium

• 成果类型: Article
• 署名作者: Heller, Yuval; Winter, Eyal
• 署名单位: Bar Ilan University; Lancaster University; Hebrew University of Jerusalem
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20170400
• 发表日期: 2020
• 页码: 1-40
• 关键词: rationalizable conjectural equilibrium; Strategic delegation; games; EVOLUTION; overconfidence; BEHAVIOR; nash; preferences; COMPETITION; FRAMEWORK

摘要

We investigate how distorted, yet structured, beliefs can persist in strategic situations. Specifically, we study two-player games in which each player is endowed with a biased-belief function that represents the discrepancy between a player's beliefs about the opponent's strategy and the actual strategy. Our equilibrium condition requires that (i) each player choose a best-response strategy to his distorted belief about the opponent's strategy, and (ii) the distortion functions form best responses to one another. We obtain sharp predictions and novel insights into the set of stable outcomes and their supporting stable biases in various classes of games.