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The benefits of coarse preferences

Author

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  • Halpern, Joseph Y.
  • Heller, Yuval
  • Winter, Eyal

Abstract

We study the strategic benefits of coarsening one’s utility by clustering payoffs together. 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, in the latter type of CUE, players treat other players better than they do in Nash equilibria in games with monotone externalities.

Suggested Citation

  • Halpern, Joseph Y. & Heller, Yuval & Winter, Eyal, 2025. "The benefits of coarse preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 229(C).
    • Handle: RePEc:eee:jeborg:v:229:y:2025:i:c:s016726812400458x
    DOI: 10.1016/j.jebo.2024.106844
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    Keywords

    Categorization; Language; Indirect evolutionary approach; Monotone externalities; Strategic complements; Strategic substitutes;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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