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Quotient Spaces of Boundedly Rational Types

Davide Cianciaruso and Fabrizio Germano ()

No 582, Working Papers from Barcelona School of Economics

Abstract: By identifying types whose low-order beliefs - up to level - about the state of nature coincide, we obtain quotient type spaces that are typically smaller than the original ones, preserve basic topological properties, and allow standard equilibrium analysis even under bounded reasoning. Our Bayesian Nash-equilibria capture players' inability to distinguish types belonging to the same equivalence class. The case with uncertainty about the vector of levels is also analyzed. Two examples illustrate the constructions.

Keywords: Incomplete-information games; high-order reasoning; type space; quotient space; hierarchies of beliefs; bounded rationality (search for similar items in EconPapers)
JEL-codes: C72 D03 D83 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-gth, nep-mic and nep-upt
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Working Paper: Quotient Spaces of Boundedly Rational Types (2011) Downloads
Working Paper: Quotient spaces of boundedly rational types (2011) Downloads
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