Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions

Vincent P. Crawford

University of California at San Diego, Economics Working Paper Series from Department of Economics, UC San Diego

Abstract: Starting from Hendricks and McAfee's (2000) example of the Allies' decision to feint at Calais and attack at Normandy on D-Day, this paper models misrepresentation of intentions to competitors or enemies. Allowing for the possibility of bounded strategic rationality and rational players' responses to it yields a sensible account of lying via costless, noiseless messages. In many cases the model has generically unique pure-strategy sequential equilibria, in which rational players exploit boundedly rational players, but are not themselves fooled. In others, the model has generically essentially unique mixed-strategy sequential equilibria, in which rational players' strategies protect all players from exploitation.

Date: 2001-09
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Journal Article: Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:cdl:ucsdec:2001-16

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