Please use this identifier to cite or link to this item: http://hdl.handle.net/2381/36163
Title: Evidential Equilibria: Heuristics and Biases in Static Games of Complete Information
Authors: al-Nowaihi, Ali
Dhami, Sanjit
First Published: 16-Nov-2015
Publisher: MDPI
Citation: Games, 2015, 6(4), 637-676
Abstract: Standard equilibrium concepts in game theory find it difficult to explain the empirical evidence from a large number of static games, including the prisoners’ dilemma game, the hawk-dove game, voting games, public goods games and oligopoly games. Under uncertainty about what others will do in one-shot games, evidence suggests that people often use evidential reasoning (ER), i.e., they assign diagnostic significance to their own actions in forming beliefs about the actions of other like-minded players. This is best viewed as a heuristic or bias relative to the standard approach. We provide a formal theoretical framework that incorporates ER into static games by proposing evidential games and the relevant solution concept: evidential equilibrium (EE). We derive the relation between a Nash equilibrium and an EE. We illustrate these concepts in the context of the prisoners’ dilemma game.
DOI Link: 10.3390/g6040637
ISSN: 2073-4336
eISSN: 2073-4336
Links: http://www.mdpi.com/2073-4336/6/4/637
http://hdl.handle.net/2381/36163
Version: Publisher Version
Status: Peer-reviewed
Type: Journal Article
Rights: This is an open access article distributed under the Creative Commons Attribution License (CC BY) http://creativecommons.org/licenses/by/4.0/ which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Description: JEL classifications: D03 (behavioural microeconomics: underlying principles); C7 (game theory and bargaining theory)
Appears in Collections:Published Articles, Dept. of Economics

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