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Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions

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  • Vincent P. Crawford

Abstract

Starting from an example of the Allies' decision to feint at Calais and attack Normandy on D-Day, this paper models misrepresentation of intentions to competitors or enemies. Allowing for the possibility of bounded strategic rationality and rational players' responses to it yields a sensible account of lying via costless, noiseless messages. In some leading cases, the model has generically unique pure-strategy sequential equilibria, in which rational players exploit boundedly rational players, but are not themselves fooled. In others, the model has generically essentially unique mixed-strategy sequential equilibria, in which rational players' strategies protect all players from exploitation.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/000282803321455197
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 93 (2003)
Issue (Month): 1 (March)
Pages: 133-149

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Handle: RePEc:aea:aecrev:v:93:y:2003:i:1:p:133-149

Note: DOI: 10.1257/000282803321455197
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