The commitment effect in belief evolution

Thomas P. Gehrig, Werner Güth () and René Levínský ()

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: In this note we establish that rational demand expectations will typically not evolve in an evolutionary model. In an evolutionary model, beliefs act like a commitment device to more aggressive behavior. This commitment effect has the same direction for strategic substitutes and complements and fades away in large markets.

Date: 2003-06
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Journal Article: The commitment effect in belief evolution (2004)
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