dc.contributor.author |
Germano, Fabrizio |
dc.contributor.author |
Zuazo-Garin, Peio |
dc.date |
2017 |
dc.identifier.citation |
Germano F, Zuazo-Garin P. Bounded rationality and correlated equilibria. Int J Game Theory. 2017 Aug;46(3):595-629. DOI: 10.1007/s00182-016-0547-5 |
dc.identifier.citation |
0020-7276 |
dc.identifier.citation |
https://dx.doi.org/10.1007/s00182-016-0547-5 |
dc.identifier.uri |
http://hdl.handle.net/10230/36218 |
dc.format |
application/pdf |
dc.language.iso |
eng |
dc.publisher |
Springer |
dc.relation |
International Journal of Game Theory. 2017 Aug;46(3):595-629. |
dc.relation |
info:eu-repo/grantAgreement/ES/1PE/ECO2014-59225-P |
dc.relation |
info:eu-repo/grantAgreement/ES/3PN/ECO2009-11213 |
dc.relation |
info:eu-repo/grantAgreement/ES/3PN/ECO2012-31326 |
dc.rights |
info:eu-repo/semantics/openAccess |
dc.rights |
© Springer The final publication is available at Springer via
http://dx.doi.org/10.1007/s00182-016-0547-5 |
dc.subject |
Strategic interaction |
dc.subject |
Correlated equilibrium |
dc.subject |
Robustness to bounded rationality |
dc.subject |
Approximate knowledge |
dc.subject |
Incomplete information |
dc.subject |
Measure of rationality |
dc.subject |
Experiments |
dc.title |
Bounded rationality and correlated equilibria |
dc.type |
info:eu-repo/semantics/article |
dc.type |
info:eu-repo/semantics/acceptedVersion |
dc.description.abstract |
We study an interactive framework that explicitly allows for nonrational behavior. We do not place any restrictions on how players’ behavior deviates from rationality, but rather, on players’ higher-order beliefs about the frequency of such deviations. We assume that there exists a probability p such that all players believe, with at least probability p, that their opponents play rationally. This, together with the assumption of a common prior, leads to what we call the set of p-rational outcomes, which we define and characterize for arbitrary probability p. We then show that this set varies continuously in p and converges to the set of correlated equilibria as p approaches 1, thus establishing robustness of the correlated equilibrium concept to relaxing rationality and common knowledge of rationality. The p-rational outcomes are easy to compute, also for games of incomplete information. Importantly, they can be applied to observed frequencies of play for arbitrary normal-form games to derive a measure of rationality p that bounds from below the probability with which any given player chooses actions consistent with payoff maximization and common knowledge of payoff maximization. |
dc.description.abstract |
Germano acknowledges financial support from the Spanish Ministry of Economy and Competitiveness (Grant ECO2014-59225-P), as well as from the Barcelona GSE Research Network and the Generalitat de Catalunya. Zuazo-Garin acknowledges financial support from the Spanish Ministry of Science and Technology (Grant ECO2009-11213), from the Spanish Ministry of Economy and Competitiveness (Grant ECO2012-31326) and from the Basque Government (Grants IT568-13 and POS-2015-1-0022). |