Inclusive Cognitive Hierarchy in Collective Decisions

Yukio Koriyama and Ali Ozkes

No 1819, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: We study the implications of structural models of non-equilibrium thinking, in which players best respond while holding heterogeneous beliefs on the cognitive levels of others. We introduce an inclusive cognitive hierarchy model, in which players are capable of projecting the self to others in regard to their cognitive level. The model is tested in a laboratory experiment of collective decision-making, which supports inclusiveness. Our theoretical results show that inclusiveness is a key factor for asymptotic properties of deviations from equilibrium behavior. Asymptotic behavior can be categorized into three distinct types: naïve, Savage rational with inconsistent beliefs, and sophisticated.

Keywords: collective decision-making; bounded rationality; cognitive hierarchy; information aggregation (search for similar items in EconPapers)
JEL-codes: C92 D72 D91 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2018-06
New Economics Papers: this item is included in nep-cbe, nep-cdm and nep-exp
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Inclusive Cognitive Hierarchy (2020)
Working Paper: Inclusive Cognitive Hierarchy in Collective Decisions (2018)
Working Paper: Condorcet Jury Theorem and Cognitive Hierarchies: Theory and Experiments (2017)
Working Paper: Condorcet Jury Theorem and Cognitive Hierarchies: Theory and Experiments (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1819

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