The Benefits of Coarse Preferences
Joseph Y. Halpern,
Yuval Heller and
Eyal Winter ()
Papers from arXiv.org
We study the strategic advantages of coarsening one's utility by clustering nearby payoffs together (i.e., classifying them the same way). Our solution concept, coarse-utility equilibrium (CUE) requires that (1) each player maximizes her coarse utility, given the opponent's strategy, and (2) the classifications form best replies to one another. We characterize CUEs in various games. In particular, we show that there is a qualitative difference between CUEs in which only one of the players clusters payoffs, and those in which all players cluster their payoffs, and that the latter type induce players to treat co-players better than in Nash equilibria in the large class of games with monotone externalities.
Date: 2022-01, Revised 2023-06
New Economics Papers: this item is included in nep-gth, nep-mic and nep-upt
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Working Paper: The Benefits of Coarse Preferences (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2201.10141
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