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Modeling players with random “data access”

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  • Spiegler, Ran

Abstract

I present an approach to static equilibrium modeling with non-rational expectations, which is based on enriching players' typology. A player is characterized by his “data access”, consisting of: (i) “news access”, which corresponds to a conventional signal in the Harsanyi model, and (ii) “archival access”, a novel component representing the player's piecemeal knowledge of steady-state correlations. Drawing on prior literature on correlation neglect and coarse reasoning, I assume the player extrapolates a well-specified probabilistic belief from his “archival data” according to the maximum-entropy criterion. I show with a series of examples how this formalism extends our ability to represent and analyze strategic interactions without rational expectations.

Suggested Citation

  • Spiegler, Ran, 2021. "Modeling players with random “data access”," Journal of Economic Theory, Elsevier, vol. 198(C).
  • Handle: RePEc:eee:jetheo:v:198:y:2021:i:c:s0022053121001915
    DOI: 10.1016/j.jet.2021.105374
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    Cited by:

    1. Philippe Jehiel & Konrad Mierendorff, 2021. "Auction Design with Data-Driven Misspecifications," Papers 2107.00640, arXiv.org.

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    More about this item

    Keywords

    Non-rational expectations; Non-standard type space; Archival information; Maximum entropy; Limited data access;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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