Modeling players with random “data access”

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Abstract

I present an approach to static equilibrium modeling with non-rational expectations, which is based on enriching players' typology. A player is characterized by his “data access”, consisting of: (i) “news access”, which corresponds to a conventional signal in the Harsanyi model, and (ii) “archival access”, a novel component representing the player's piecemeal knowledge of steady-state correlations. Drawing on prior literature on correlation neglect and coarse reasoning, I assume the player extrapolates a well-specified probabilistic belief from his “archival data” according to the maximum-entropy criterion. I show with a series of examples how this formalism extends our ability to represent and analyze strategic interactions without rational expectations.

Original languageEnglish
Article number105374
JournalJournal of Economic Theory
Volume198
DOIs
StatePublished - Dec 2021

Keywords

  • Archival information
  • Limited data access
  • Maximum entropy
  • Non-rational expectations
  • Non-standard type space

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