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Network Perception in Network Games

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  • Ruiz Palazuelos, Sofía

Abstract

People form cognitive maps about their networks from the information they have −mental representations of who is connected with whom in the network they are embedded in (Krackhardt, 1987). The aim of this paper is twofold. First, we develop a model of how people form mental representations about the network from the (incomplete) information they have. We relate them with notions of equivalence among nodes and identify a cognitive bias towards asymmetric network structures. We then explore the incidence that players’ network perception has on their equilibrium behavior and payoffs in the induced Bayesian Games. A general condition for equilibrium existence under different setups of incomplete network information is derived. Such a condition uncovers the relevance of the order of the automorphism group of the cognitive networks as a main driver of behavior and welfare.

Suggested Citation

  • Ruiz Palazuelos, Sofía, 2021. "Network Perception in Network Games," MPRA Paper 115212, University Library of Munich, Germany, revised 21 Jun 0022.
    • Handle: RePEc:pra:mprapa:115212
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    File URL: https://mpra.ub.uni-muenchen.de/115212/1/MPRA_paper_115212.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Network Games; Graphical Games; Network Cognition; Incomplete Information; Structural Equivalence; Automorphic Equivalence;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D0 - Microeconomics - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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