Magical thinking: A representation result

Brendan Daley and Philipp Sadowski ()
Additional contact information
Philipp Sadowski: Department of Economics, Duke University

Theoretical Economics, 2017, vol. 12, issue 2

Abstract: This paper suggests a novel way to import the approach of axiomatic theories of individual choice into strategic settings and demonstrates the benefits of this approach. We propose both a tractable behavioral model as well as axioms applied to the behavior of the collection of players, focusing first on Prisoners' Dilemma games. A representation theorem establishes these axioms as the precise behavioral content of the model, and that the model's parameters are (essentially) uniquely identified from behavior. The behavioral model features magical thinking: players behave as if their expectations about their opponents' behavior vary with their own choices. The model provides a unified view of documented behavior in a range of often-studied games, such as the Prisoners' Dilemma, the Battle of the Sexes, Hawk-Dove, and the Stag Hunt, and also generates novel predictions across games.

Keywords: Magical thinking; axioms/representation theorem; prisoners' dilemma; coordination games (search for similar items in EconPapers)
JEL-codes: C7 D8 (search for similar items in EconPapers)
Date: 2017-05-30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://econtheory.org/ojs/index.php/te/article/viewFile/20170909/17926/534 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:2099

Access Statistics for this article

Theoretical Economics is currently edited by Federico Echenique, Mira Frick, Pablo Kurlat, Juuso Toikka, Rakesh Vohra

More articles in Theoretical Economics from Econometric Society
Bibliographic data for series maintained by Martin J. Osborne ().