Quotient spaces of boundedly rational types

Davide Cianciaruso and Fabrizio Germano

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: By identifying types whose low-order beliefs – up to level li – 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 (li; l-i)-equilibria capture players’ inability to distinguish types belonging to the same equivalence class. The case with uncertainty about the vector of levels (li; l-i) 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
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Quotient Spaces of Boundedly Rational Types (2015)
Working Paper: Quotient Spaces of Boundedly Rational Types (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1287

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