Multidimensional reasoning in games: Framework, equilibrium, and applications

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Abstract

We develop a framework for analyzing multidimensional reasoning in strategic interactions, which is motivated by two experimental findings: (i) in games with a large and complex strategy space, players tend to think in terms of strategy characteristics rather than the strategies themselves; (ii) in their strategic deliberation, players consider one characteristic at a time. A multidimensional equilibrium is a vector of characteristics representing a stable mode of behavior: a player does not wish to modify any one characteristic. The concept is applied to several economic interactions, where a vector of characteristics, rather than a distribution of strategies, is identified as stable.

Original languageEnglish
Pages (from-to)285-318
Number of pages34
JournalAmerican Economic Journal: Microeconomics
Volume11
Issue number3
DOIs
StatePublished - Aug 2019

Funding

FundersFunder number
Blavatnik Interdisciplinary Cyber Research Center
Henry Crown Institute of Business Research in Israel
European Research Council269143

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