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Cognitive Uncertainty in Games - A Note on Limited Information Processing and Backward Induction

Author

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  • Thorsten Clausing

    (University of Magdeburg)

Abstract

A notion of cognitive uncertainty is introduced as an agent's uncertainty about the validity of the results of his own information processing. In order to analyze this notion, a formal model of the agent's information processing is presented. It is shown how cognitive uncertainty may prevent a group of well informed rational agents from playing backward induction in a game of perfect information, whereas they would play backward induction without such uncertainty.

Suggested Citation

  • Thorsten Clausing, 2000. "Cognitive Uncertainty in Games - A Note on Limited Information Processing and Backward Induction," Game Theory and Information 0004001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpga:0004001
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/game/papers/0004/0004001.pdf
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    References listed on IDEAS

    as
    1. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
    2. Zauner, Klaus G., 1999. "A Payoff Uncertainty Explanation of Results in Experimental Centipede Games," Games and Economic Behavior, Elsevier, vol. 26(1), pages 157-185, January.
    3. McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-836, July.
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    Cited by:

    1. Akter, Sonia & Bennett, Jeffrey W., 2009. "A cognitive psychological approach of analyzing preference uncertainty in contingent valuation," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47938, Australian Agricultural and Resource Economics Society.

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    More about this item

    Keywords

    uncertainty; information processing; backward induction;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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