What situation is this? Coarse cognition and behavior over a space of games

Robert Gibbons, Marco LiCalzi and Massimo Warglien ()
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Massimo Warglien: Dept. of Management, Università Ca' Foscari Venice

No 9, Working Papers from Venice School of Management - Department of Management, Università Ca' Foscari Venezia

Abstract: We study strategic interaction between agents who distill the complex world around them into simpler situations. Assuming agents share the same cognitive frame, we show how the frame affects equilibrium outcomes. In one-shot and repeated interactions, the frame causes agents to be either better or worse off than if they could perceive the environment in full detail: it creates a fog of cooperation or a fog of conflict. In repeated interaction, the frame is as important as agentsÕ patience in determining the set of equilibria: for a fixed discount factor, when all agents coordinate on what they perceive as the best equilibrium, there remain significant performance differences across dyads with different frames. Finally, we analyze some tensions between incremental versus radical changes in the cognitive frame.

Keywords: categorization; frame; mental model; small world; culture; leadership. (search for similar items in EconPapers)
JEL-codes: C79 D01 D23 L14 M14 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2017-09
New Economics Papers: this item is included in nep-gth, nep-hpe, nep-mic and nep-neu
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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