Finite depth of reasoning and equilibrium play in games with incomplete information

Arbeitspapier

The standard framework for analyzing games with incomplete information models players as if they have an infinite depth of reasoning, which is not always consistent with experimental evidence. This paper generalizes the type spaces of Harsanyi (1967-1968) so that players can have a finite depth of reasoning. We do this restricting the set of events that a player of a finite depth can reason about. This approach allows us to extend the Bayesian-Nash equilibrium concept to environments with players with a finite depth of reasoning. We demonstrate that the standard approach of modeling beliefs with Harsanyi type spaces fails to capture the equilibrium behavior of players with a finite depth, at least in some games. Consequently, the standard approach cannot be used to describe the equilibrium behavior of players with a finite depth in general.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper ; No. 1569

Classification and Topics

• Classification: Wirtschaft ; Game Theory and Bargaining Theory: General ; Noncooperative Games ; Information, Knowledge, and Uncertainty: General ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: Bounded rationality ; higher-order beliefs ; finite depth of reasoning ; games with incomplete information ; Bayesian equilibrium

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kets, Willemien
• Event: Veröffentlichung
• (who): Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
• (where): Evanston, IL
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/97236
• Last update: 10.03.2025, 11:42 AM CET