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Strategic Behavior under Context Misalignment

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  • Pierfrancesco Guarino
  • Gabriel Ziegler

Abstract

We study the behavioral implications of Rationality and Common Strong Belief in Rationality (RCSBR) with contextual assumptions allowing players to entertain misaligned beliefs, i.e., players can hold beliefs concerning their opponents' beliefs where there is no opponent holding those very beliefs. Taking the analysts' perspective, we distinguish the infinite hierarchies of beliefs actually held by players ("real types") from those that are a byproduct of players' hierarchies ("imaginary types") by introducing the notion of separating type structure. We characterize the behavioral implications of RCSBR for the real types across all separating type structures via a family of subsets of Full Strong Best-Reply Sets of Battigalli & Friedenberg (2012). By allowing misalignment, in dynamic games we can obtain behavioral predictions inconsistent with RCSBR (in the standard framework), contrary to the case of belief-based analyses for static games--a difference due to the dichotomy "non-monotonic vs. monotonic" reasoning.

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  • Pierfrancesco Guarino & Gabriel Ziegler, 2022. "Strategic Behavior under Context Misalignment," Papers 2205.00564, arXiv.org.
    • Handle: RePEc:arx:papers:2205.00564
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    References listed on IDEAS

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    1. Perea,Andrés, 2012. "Epistemic Game Theory," Cambridge Books, Cambridge University Press, number 9781107401396.
    2. Perea,Andrés, 2012. "Epistemic Game Theory," Cambridge Books, Cambridge University Press, number 9781107008915.
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