Paying attention to payoffs in analogy-based learning
AbstractThis paper introduces the payoff-confirming analogy-based expectation equilibrium (PCABEE) as a way to refine the set of analogy-based equilibria and the associated admissible analogy partitions. In addition to the actions of others, own payoff history provides information about othersâ strategies but, yet, non-Bayesian Nash equilibria may exist both with an incorrect and a correct prior. We provide general conditions when this happens. Two stylized employer-employee interactions, one with a correct and one with an incorrect prior, are provided illustrating how PCABEE can be used to analyze robust stereotypes and how incorrect such stereotypes may lead to discrimination.
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 50 (2012)
Issue (Month): 1 (May)
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Web page: http://link.springer.de/link/service/journals/00199/index.htm
Other versions of this item:
- Miettinen, Topi, 2009. "Paying Attention to Payoffs in Analogy-Based Learning," SITE Working Paper Series 7, Stockholm Institute of Transition Economics, Stockholm School of Economics.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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- Miettinen, Topi, 2009. "The partially cursed and the analogy-based expectation equilibrium," Economics Letters, Elsevier, vol. 105(2), pages 162-164, November.
- Christoph March, 2011. "Adaptive social learning," Working Papers halshs-00572528, HAL.
- Miettinen, Topi, 2008. "Analogy-based Expectations and the Partially Cursed Equilibrium," Working Paper Series in Economics and Finance 708, Stockholm School of Economics, revised 12 Dec 2008.
- Christoph March, 2011. "Adaptive social learning," PSE Working Papers halshs-00572528, HAL.
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