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A Theory of Deception

Author

Listed:
  • David Ettinger
  • Philippe Jehiel

Abstract

This paper proposes an equilibrium approach to belief manipulation and deception in which agents only have coarse knowledge of their opponent's strategy. Equilibrium requires the coarse knowledge available to agents to be correct, and the inferences and optimizations to be made on the basis of the simplest theories compatible with the available knowledge. The approach can be viewed as formalizing into a game theoretic setting a well documented bias in social psychology, the fundamental attribution error. It is applied to a bargaining problem, thereby revealing a deceptive tactic that is hard to explain in the full rationality paradigm. (JEL C78, D83, D84)

Suggested Citation

  • David Ettinger & Philippe Jehiel, 2010. "A Theory of Deception," American Economic Journal: Microeconomics, American Economic Association, vol. 2(1), pages 1-20, February.
    • Handle: RePEc:aea:aejmic:v:2:y:2010:i:1:p:1-20
    Note: DOI: 10.1257/mic.2.1.1
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    References listed on IDEAS

    as
    1. Sendhil Mullainathan & Joshua Schwartzstein & Andrei Shleifer, 2008. "Coarse Thinking and Persuasion," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 577-619.
    2. Jehiel, Philippe, 2005. "Analogy-based expectation equilibrium," Journal of Economic Theory, Elsevier, vol. 123(2), pages 81-104, August.
    3. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
    4. Joel Sobel, 1985. "A Theory of Credibility," Review of Economic Studies, Oxford University Press, vol. 52(4), pages 557-573.
    5. Jehiel, Philippe & Samet, Dov, 2007. "Valuation equilibrium," Theoretical Economics, Econometric Society, vol. 2(2), June.
    6. Drew Fudenberg & David K. Levine, 2008. "Reputation And Equilibrium Selection In Games With A Patient Player," World Scientific Book Chapters,in: A Long-Run Collaboration On Long-Run Games, chapter 7, pages 123-142 World Scientific Publishing Co. Pte. Ltd..
    7. Ignacio Esponda, 2008. "Behavioral Equilibrium in Economies with Adverse Selection," American Economic Review, American Economic Association, vol. 98(4), pages 1269-1291, September.
    8. Jeheil Phillippe, 1995. "Limited Horizon Forecast in Repeated Alternate Games," Journal of Economic Theory, Elsevier, vol. 67(2), pages 497-519, December.
    9. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Spiegler, Ran, 2018. "News and Archival Information in Games," CEPR Discussion Papers 12805, C.E.P.R. Discussion Papers.
    2. Christoph March, 2011. "Adaptive social learning," PSE Working Papers halshs-00572528, HAL.
    3. repec:bpj:bejtec:v:19:y:2019:i:1:p:21:n:1 is not listed on IDEAS
    4. Ran Spiegler, 2016. "Bayesian Networks and Boundedly Rational Expectations," The Quarterly Journal of Economics, Oxford University Press, vol. 131(3), pages 1243-1290.
    5. repec:eee:gamebe:v:107:y:2018:i:c:p:153-181 is not listed on IDEAS
    6. repec:eee:gamebe:v:110:y:2018:i:c:p:50-57 is not listed on IDEAS
    7. Huck, Steffen & Jehiel, Philippe & Rutter, Tom, 2011. "Feedback spillover and analogy-based expectations: A multi-game experiment," Games and Economic Behavior, Elsevier, vol. 71(2), pages 351-365, March.
    8. Ennio Bilancini & Leonardo Boncinelli, 2014. "Persuasion with Reference Cues and Elaboration Costs," Working Papers - Economics wp2014_04.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    9. Asen Ivanov & Dan Levin & James Peck, 2009. "Hindsight, Foresight, and Insight: An Experimental Study of a Small-Market Investment Game with Common and Private Values," American Economic Review, American Economic Association, vol. 99(4), pages 1484-1507, September.
    10. Emir Kamenica & Matthew Gentzkow, 2011. "Bayesian Persuasion," American Economic Review, American Economic Association, vol. 101(6), pages 2590-2615, October.
    11. repec:eee:jeborg:v:143:y:2017:i:c:p:1-8 is not listed on IDEAS
    12. Jeanne Hagenbach & Frédéric Koessler, 2019. "Partial Language Competence," PSE Working Papers halshs-01988076, HAL.
    13. Hagenbach, Jeanne & Koessler, Frédéric, 2017. "The Streisand effect: Signaling and partial sophistication," Journal of Economic Behavior & Organization, Elsevier, vol. 143(C), pages 1-8.
    14. Philippe Jehiel & Larry Samuelson, 2012. "Reputation with Analogical Reasoning," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1927-1969.
    15. repec:pit:wpaper:381 is not listed on IDEAS
    16. Mailath, George J. & Samuelson, Larry, 2015. "Reputations in Repeated Games," Handbook of Game Theory with Economic Applications, Elsevier.
    17. Jeanne Hagenbach & Frédéric Koessler, 2019. "Partial Language Competence," Sciences Po publications 2019-08, Sciences Po.
    18. Hagenbach, Jeanne & Koessler, Frédéric, 2019. "Partial Language Competence," CEPR Discussion Papers 13488, C.E.P.R. Discussion Papers.
    19. repec:eee:joepsy:v:65:y:2018:i:c:p:90-107 is not listed on IDEAS
    20. Vikander Nick, 2019. "Sellouts, Beliefs, and Bandwagon Behavior," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 19(1), pages 1-21, January.
    21. repec:oup:restud:v:84:y:2017:i:4:p:1818-1841. is not listed on IDEAS
    22. Jeanne Hagenbach & Frédéric Koessler, 2019. "Partial Language Competence," Sciences Po Economics Discussion Papers 2019-08, Sciences Po Departement of Economics.
    23. Mira Frick & Ryota Iijima & Yuhta Ishii, 2018. "Dispersed Behavior and Perceptions in Assortative Societies," Cowles Foundation Discussion Papers 2128R, Cowles Foundation for Research in Economics, Yale University, revised Mar 2019.
    24. Edward Cartwright & Amrish Patel, 2010. "Public Goods, Social Norms, and Naïve Beliefs," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(2), pages 199-223, April.

    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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