Nash equilibrium is often interpreted as a steady state in which each player holds the correct expectations about the other players` behavior and acts rationally. This paper investigates the robustness of this interpretation when players` preferences are affected by their forecasts about the other players. In particular, I analyze the case of lexicographic preferences in which the simplicity of forecasts is secondary to material payoffs.
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Paper provided by Tel Aviv in its series Papers with number
2001-6.
Find related papers by JEL classification: O21 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy O22 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
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