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Quotient Spaces of Boundedly Rational Types

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  • Davide Cianciaruso
  • Fabrizio Germano

Abstract

By identifying types whose low-order beliefs - up to level - 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-equilibria capture players' inability to distinguish types belonging to the same equivalence class. The case with uncertainty about the vector of levels is also analyzed. Two examples illustrate the constructions.

Suggested Citation

  • Davide Cianciaruso & Fabrizio Germano, 2011. "Quotient Spaces of Boundedly Rational Types," Working Papers 582, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:582
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    References listed on IDEAS

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    Cited by:

    1. Yildiz, Muhamet, 2015. "Invariance to representation of information," Games and Economic Behavior, Elsevier, vol. 94(C), pages 142-156.

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    More about this item

    Keywords

    Incomplete-information games; high-order reasoning; type space; quotient space; hierarchies of beliefs; bounded rationality;
    All these keywords.

    JEL classification:

    • 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; Information and Knowledge; Communication; Belief; Unawareness

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