IDEAS home Printed from https://ideas.repec.org/p/gre/wpaper/2017-01.html
   My bibliography  Save this paper

Mindreading and Endogenous Beliefs in Games

Author

Listed:
  • Lauren Larrouy

    (Université Côte d'Azur
    GREDEG CNRS)

  • Guilhem Lecouteux

    (Université Côte d'Azur
    GREDEG CNRS)

Abstract

We argue that a Bayesian explanation of strategic choices in games requires introducing a psychological theory of belief formation. We highlight that beliefs in epistemic game theory are derived from the actual choice of the players, and cannot therefore explain why Bayesian rational players should play the strategy they actually chose. We introduce the players’ capacity of mindreading in a game theoretical framework with the simulation theory, and characterise the beliefs that Bayes rational players could endogenously form in games. We show in particular that those beliefs need not be ratifiable, and therefore that rational players can form action-dependent beliefs.

Suggested Citation

  • Lauren Larrouy & Guilhem Lecouteux, 2017. "Mindreading and Endogenous Beliefs in Games," GREDEG Working Papers 2017-01, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis, revised Jun 2017.
  • Handle: RePEc:gre:wpaper:2017-01
    as

    Download full text from publisher

    File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2017-01.pdf
    File Function: Revised version, 2017-06
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Andrew Colman & Michael Bacharach, 1997. "Payoff Dominance And The Stackelberg Heuristic," Theory and Decision, Springer, vol. 43(1), pages 1-19, July.
    2. Viktor J. Vanberg, 2008. "The Economics of Moral Preferences," American Journal of Economics and Sociology, Wiley Blackwell, vol. 67(4), pages 605-628, October.
    3. Joseph B. Kadane & Patrick D. Larkey, 1982. "Subjective Probability and the Theory of Games," Management Science, INFORMS, vol. 28(2), pages 113-120, February.
    4. Lauren Larrouy & Guilhem Lecouteux, 2017. "Mindreading and endogenous beliefs in games," Post-Print halshs-01589566, HAL.
    5. Joseph B. Kadane & Patrick D. Larkey, 1982. "Reply to Professor Harsanyi," Management Science, INFORMS, vol. 28(2), pages 124-124, February.
    6. Robert J. Aumann & Jacques H. Dreze, 2008. "Rational Expectations in Games," American Economic Review, American Economic Association, vol. 98(1), pages 72-86, March.
    7. Aumann, Robert J, 1987. "Correlated Equilibrium as an Expression of Bayesian Rationality," Econometrica, Econometric Society, vol. 55(1), pages 1-18, January.
    8. Marco Mariotti, 1997. "Decisions in games: why there should be a special exemption from Bayesian rationality," Journal of Economic Methodology, Taylor & Francis Journals, vol. 4(1), pages 43-60.
    9. Michael Bacharach, 2006. "The Hi-Lo Paradox, from Beyond Individual Choice: Teams and Frames in Game Theory," Introductory Chapters,in: Natalie Gold & Robert Sugden (ed.), Beyond Individual Choice: Teams and Frames in Game Theory Princeton University Press.
    10. Bernheim, B Douglas, 1984. "Rationalizable Strategic Behavior," Econometrica, Econometric Society, vol. 52(4), pages 1007-1028, July.
    11. Battalio, Raymond & Samuelson, Larry & Van Huyck, John, 2001. "Optimization Incentives and Coordination Failure in Laboratory Stag Hunt Games," Econometrica, Econometric Society, vol. 69(3), pages 749-764, May.
    12. Itzhak Gilboa, 1992. "Why the Empty Shells Were Not Fired: A Semi-Bibliographical Note," Discussion Papers 987, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    13. Alvin E. Roth & Françoise Schoumaker, 1983. "Note---Subjective Probability and the Theory of Games: Some Further Comments," Management Science, INFORMS, vol. 29(11), pages 1337-1340, November.
    14. Stalnaker, Robert, 1996. "Knowledge, Belief and Counterfactual Reasoning in Games," Economics and Philosophy, Cambridge University Press, vol. 12(02), pages 133-163, October.
    15. Sen, Amartya K, 1973. "Behaviour and the Concept of Preference," Economica, London School of Economics and Political Science, vol. 40(159), pages 241-259, August.
    16. Haruvy, Ernan & Stahl, Dale O. & Wilson, Paul W., 1999. "Evidence for optimistic and pessimistic behavior in normal-form games," Economics Letters, Elsevier, vol. 63(3), pages 255-259, June.
    17. John C. Harsanyi, 1982. "Rejoinder to Professors Kadane and Larkey," Management Science, INFORMS, vol. 28(2), pages 124-125, February.
    18. Mariotti, Marco, 1995. "Is Bayesian Rationality Compatible with Strategic Rationality?," Economic Journal, Royal Economic Society, vol. 105(432), pages 1099-1109, September.
    19. John C. Harsanyi, 1967. "Games with Incomplete Information Played by "Bayesian" Players, I-III Part I. The Basic Model," Management Science, INFORMS, vol. 14(3), pages 159-182, November.
    20. Binmore, Ken, 2007. "Playing for Real: A Text on Game Theory," OUP Catalogue, Oxford University Press, number 9780195300574.
    21. Masel, Joanna, 2007. "A Bayesian model of quasi-magical thinking can explain observed cooperation in the public good game," Journal of Economic Behavior & Organization, Elsevier, vol. 64(2), pages 216-231, October.
    22. Ken Binmore, 2007. "Does Game Theory Work? The Bargaining Challenge," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262026074, March.
    23. Ken Binmore, 1998. "Game Theory and the Social Contract - Vol. 2: Just Playing," MIT Press Books, The MIT Press, edition 1, volume 2, number 0262024446, March.
    24. Ken Binmore, 1994. "Game Theory and the Social Contract, Volume 1: Playing Fair," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262023636, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cilem Selin Hazir & Flora Bellone & Cyrielle Gaglio, 2017. "Local Product Space and Firm Level Churning in Exported Products," GREDEG Working Papers 2017-02, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    2. Lauren Larrouy & Guilhem Lecouteux, 2017. "Mindreading and endogenous beliefs in games," Post-Print halshs-01589566, HAL.
    3. Guilhem Lecouteux, 2017. "Bayesian Game Theorists and Non-Bayesian Players," GREDEG Working Papers 2017-30, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    4. Nicolas Brisset, 2017. "What Do We Learn from Market Design?," GREDEG Working Papers 2017-03, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    5. Guilhem Lecouteux, 2017. "Bayesian Game Theorists and non-Bayesian Players," Working Papers halshs-01633126, HAL.

    More about this item

    Keywords

    prior beliefs; mindreading; simulation; action-dependent beliefs; choice under uncertainty;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gre:wpaper:2017-01. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Patrice Bougette). General contact details of provider: http://edirc.repec.org/data/credcfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.