Evidential equilibria in static games

Sanjit Dhami and Ali al-Nowaihi ()

No 12/15, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: Under uncertainty about what others will do, evidence suggests that people often use evidential reasoning (ER), i.e., they assign diagnostic significance to their own actions in forming beliefs about the actions of others. ER successfully explains the evidence from many important games. We provide a formal theoretical framework for discussing ER by proposing evidential games and the relevant solution concept evidential equilibrium (EE). We derive the relation between a Nash equilibrium and an EE. We apply EE to several common games including the prisoners’ dilemma and oligopoly games.

Keywords: Evidential and causal reasoning; evidential games; social projection functions; ingroups and outgroups; evidential equilibria and consistent evidential equilibria; Nash equilibria, common knowledge and epistemic foundations. (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-mic
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