The implications of finite-order reasoning

Artikel

The epistemic conditions of rationality and mth-order strong belief of rationality (RmSBR; Battigalli and Siniscalchi, 2002) formalize the idea that players engage in contextualized forward-induction reasoning. This paper characterizes the behavior consistent with RmSBR across all type structures. In particular, in a class of generic games, R(m - 1)SBR is characterized by a new solution concept we call an m-best response sequence (m-BRS). Such sequences are an iterative version of extensive-form best response sets (Battigalli and Friedenberg, 2012). The strategies that survive m rounds of extensive-form rationalizability are consistent with an m-BRS, but there are m-BRS's that are disjoint from the former set. As such, there is behavior that is consistent with R(m - 1)SBR but inconsistent with m rounds of extensive-form rationalizability. We use our characterization to draw implications for the interpretation of experimental data. Specifically, we show that the implications are nontrivial in the three-repeated Prisoner's Dilemma and Centipede games.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 16 ; Year: 2021 ; Issue: 4 ; Pages: 1605-1654 ; New Haven, CT: The Econometric Society

Classification and Topics

• Classification: Wirtschaft ; Microeconomic Behavior: Underlying Principles ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: Epistemic game theory ; strategic uncertainty ; bounded reasoning ; identifying reasoning

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Brandenburger, Adam ; Danieli, Alexander ; Friedenberg, Amanda
• Event: Veröffentlichung
• (who): The Econometric Society
• (where): New Haven, CT
• (when): 2021

Further information

• DOI: doi:10.3982/TE2889
• Handle: http://hdl.handle.net/10419/253445
• Last update: 10.03.2025, 11:44 AM CET