Quel degré de rationalité favorise la coordination des agents ?. Un exemple

Pierre-Alain Taillard

Revue d'économie politique, 2006, vol. 116, issue 1, 23-42

Abstract: The aim of this article is to study the consequences of the psychological grounded assumption that people?s judgements are biased under uncertainty on the behaviors of agents in an economy represented by a coordination game under incomplete information. I focus particularly on two biases: the avaibility heuristic and optimism. The avaibility heuristic means that when processing information agents give more weight to salient facts than otherwise informative facts. Salient information is often described as vivid as opposed to pallid information. Vivid information is easy to retreave or strike the agent?s attention like private information as opposed to public information. As a consequence, I model an agent suffering from the avaibility heuristic as conditioning his expectation only on his private information even if better, i.e., public information is available. Optimism and means that each agent believes to be cleverer than the average. As a consequence, I model an agent suffering from optimism as believing to be the only one able to forecast the behavior of others. My aim is to contrast the behaviors of agents suffering from these two biases with the behaviors of agents who have rational expectations. That is why I nevertheless maintain the assumption of consistent beliefs. I study a coordination game in incomplete information played by agents who hold these psychological expectations? formations. A coordination game has multiple equilibria that can be Pareto ranked. The selection of a specific equilibrium depends on the expectations each agent has about the behaviors of others, which are themselves conditioned on their expectations about others? behaviors. Therefore the problem of coordination is one of coordinating expectations. I add noise to the canonical coordination game and I study the consequences of these two biases on the way in which agents process information when forming their expectations, on the equilibrium of the economy. I show that when agents hold these expectations? formation, one particular equilibrium is chosen that can account for agents? mistakes. The equilibrium chosen can eventually Pareto dominate the low equilibrium of the underlying coordination game in complete information. I show that the indeterminacy of equilibria is inherent to the joint hypotheses of rationality of agents and common knowledge of rationality. In this case, the structure of the economy is reflexive: The goal of an agent is to forecast the expectations and the behavior of others? agents and they care no more about their private information.

Keywords: coordination games; psychological biases; bounded rationality; equilibrium selection (search for similar items in EconPapers)
Date: 2006
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