Quotient Spaces of Boundedly Rational Types
AbstractBy identifying types whose low-order beliefs, up to level l(sub i), about the state of nature coincide, we obtain quotient type spaces that are typically smaller than the original ones, preserve basic topological properties, and allow standard equilibrium analysis even under bounded reasoning. Our Bayesian Nash (l(sub i, l sub _i)-equilibria capture players’ inability to distinguish types belonging to the same equivalence class. The case with uncertainty about the vector of levels (l(sub i, l sub _i) is also analyzed. Two examples illustrate the constructions. JEL Classification Numbers: C72, D03, D83
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Bibliographic InfoPaper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1539.
Date of creation: 20 Sep 2011
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Other versions of this item:
- Davide Cianciaruso & Fabrizio Germano, 2011. "Quotient spaces of boundedly rational types," Economics Working Papers 1287, Department of Economics and Business, Universitat Pompeu Fabra.
- Davide Cianciaruso & Fabrizio Germano, 2011. "Quotient Spaces of Boundedly Rational Types," Working Papers 582, Barcelona Graduate School of Economics.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-13 (All new papers)
- NEP-CTA-2011-12-13 (Contract Theory & Applications)
- NEP-GTH-2011-12-13 (Game Theory)
- NEP-MIC-2011-12-13 (Microeconomics)
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