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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), Université Côte d'Azur, France, revised Jun 2017.
    • Handle: RePEc:gre:wpaper:2017-01
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    References listed on IDEAS

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    Cited by:

    1. Cilem Selin Hazir & Flora Bellone & Cyrielle Gaglio, 2019. "Local product space and firm-level churning in exported products," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(6), pages 1473-1496.
    2. Guilhem Lecouteux, 2018. "Bayesian game theorists and non-Bayesian players," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 25(6), pages 1420-1454, November.
    3. Lauren Larrouy & Guilhem Lecouteux, 2018. "Choosing in a Large World: The Role of Focal Points as a Mindshaping Device," Working Papers halshs-01923244, HAL.
    4. Lauren Larrouy & Guilhem Lecouteux, 2017. "Mindreading and endogenous beliefs in games," Journal of Economic Methodology, Taylor & Francis Journals, vol. 24(3), pages 318-343, July.
    5. Guilhem Lecouteux, 2018. "What does “we” want? Team Reasoning, Game Theory, and Unselfish Behaviours," Revue d'économie politique, Dalloz, vol. 128(3), pages 311-332.
    6. repec:hal:spmain:info:hdl:2441/1f59r6ssre9eiqb2rso9ui50m2 is not listed on IDEAS
    7. Nicolas Brisset, 2017. "What Do We Learn from Market Design?," GREDEG Working Papers 2017-03, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.

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    More about this item

    Keywords

    prior beliefs; mindreading; simulation; action-dependent beliefs; choice under uncertainty;
    All these keywords.

    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

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