Quotient spaces of boundedly rational types
AbstractBy identifying types whose low-order beliefs – up to level li – 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 (li; l-i)-equilibria capture players’ inability to distinguish types belonging to the same equivalence class. The case with uncertainty about the vector of levels (li; l-i) is also analyzed. Two examples illustrate the constructions.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1287.
Date of creation: Sep 2011
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Incomplete-information games; high-order reasoning; type space; quotient space; hierarchies of beliefs; bounded rationality;
Other versions of this item:
- Davide Cianciaruso & Fabrizio Germano, 2011. "Quotient Spaces of Boundedly Rational Types," Working Papers 582, Barcelona Graduate School of Economics.
- Davide Cianciaruso & Fabrizio Germano, 2011. "Quotient Spaces of Boundedly Rational Types," Discussion Papers 1539, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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