Similarity Nash Equilibria in Statistical Games

Rossella Argenziano and Itzhak Gilboa

American Economic Journal: Microeconomics, 2023, vol. 15, issue 3, 354-86

Abstract: A statistical game is a game in which strategic interaction is mediated via a binary outcome y, coupled with a prediction problem where a characteristic x of the game may be used to predict its outcome y based on past values of (x, y). In Similarity Nash Equilibria, players combine statistical and strategic reasoning, using an estimate of y as a coordination device. They predict y by its similarity-weighted frequency and learn the optimal notion of similarity from the data. We prove that the model captures the importance of precedents and the endogenous formation of sunspots.

JEL-codes: C72 C73 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1257/mic.20220049

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