I study the robustness of Rubinstein´s (1989) E-Mail Game results towards rough inductive reasoning. Rough induction is a form of boundedly rational reasoning where a player does not carry out every inductive step. The information structure in the E-Mail game is generalized and the conditions are characterized under which Rubinstein´s results hold. Rough induction generates a payoff dominant equilibrium where the expected payoffs change continously in the probability of "faulty" communication. The article follows one of Morris´(2001a) reactions to the E-Mail game "that one should try to come up with a model of boundedly rational behavior that delivers predictions that are insensitive to whether there is common knowledge or a large number of levels of knowledge".
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number
0211.
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Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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Martin J. Osborne & Ariel Rubinstein, 1994.
"A Course in Game Theory,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262650401, December.
Other versions:
Ronald Fagin & Joseph Y. Halpern & Yoram Moses & Moshe Y. Vardi, 2003.
"Reasoning About Knowledge,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262562006, December.