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Towards a theory of deception

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Author Info

  • Philippe Jehiel

    (UCL - University College London - London's Global University - University College of London (UCL), PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris)

  • David Ettinger

    (EPEE - Centre d'Etudes des Politiques Economiques - Université d'Evry-Val d'Essonne)

Abstract

This paper proposes an equilibrium approach to deception where deception is defined to be the process by which actions are chosen to induce erroneous inferences so as to take advantage of them. Specifically, we introduce a framework with boundedly rational players in which agents make inferences based on a coarse information about others' behaviors: Agents are assumed to know only the average reaction function of other agents over groups of situations. Equilibrium requires that the coarse information available to agents is correct, and that inferences and optimizations are made based on the simplest theories compatible with the available information. We illustrate the phenomenon of deception and how reputation concerns may arise even in zero-sum games in which there is no value to commitment. We further illustrate how the possibility of deception affects standard economic insights through a number of stylized applications including a monitoring game and two simple bargaining games. The approach can be viewed as formalizing into a game theoretic setting a well documented bias in social psychology, the Fundamental Attribution Error.

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File URL: http://halshs.archives-ouvertes.fr/docs/00/59/07/67/PDF/wp200528.pdf
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Bibliographic Info

Paper provided by HAL in its series PSE Working Papers with number halshs-00590767.

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Date of creation: Sep 2005
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Handle: RePEc:hal:psewpa:halshs-00590767

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00590767
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Related research

Keywords: deception ; game theory ; fundamental attribution error;

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References

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  1. Xavier Gabaix & David Laibson, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 505-540, May.
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Citations

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Cited by:
  1. Jehiel, Philippe, 2011. "Manipulative auction design," Theoretical Economics, Econometric Society, vol. 6(2), May.
  2. Jihong Lee, 2007. "Unforeseen Contingency and Renegotiation with Asymmetric Information," Birkbeck Working Papers in Economics and Finance 0717, Birkbeck, Department of Economics, Mathematics & Statistics.
  3. Kartik, Navin & Ottaviani, Marco & Squintani, Francesco, 2007. "Credulity, lies, and costly talk," Journal of Economic Theory, Elsevier, vol. 134(1), pages 93-116, May.

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