Skip to Main content Skip to Navigation
Journal articles

Analogy-based Expectation Equilibrium

Abstract : In complex situations, agents use simplified representations to learn how their environment may react. I assume that agents bundle nodes at which other agents must move into analogy classes, and agents only try to learn the average behavior in every class. Specifically, I propose a new solution concept for multi-stage games with perfect information: at every node players choose best-responses to their analogy-based expectations, and expectations correctly represent the average behavior in every class. The solution concept is shown to differ from existing concepts, and it is applied to a variety of games, in particular the centipede game, and ultimatum/bargaining games. The approach explains in a new way why players may Pass for a large number of periods in the centipede game, and why the responder need not be stuck to his reservation value in ultimatum games. Some possible avenues for endogenizing the analogy grouping are also suggested.
Document type :
Journal articles
Complete list of metadatas

https://hal-pjse.archives-ouvertes.fr/halshs-00754070
Contributor : Caroline Bauer <>
Submitted on : Tuesday, November 20, 2012 - 8:41:19 AM
Last modification on : Thursday, March 5, 2020 - 6:15:55 PM

Links full text

Identifiers

Collections

Citation

Philippe Jehiel. Analogy-based Expectation Equilibrium. Journal of Economic Theory, Elsevier, 2005, 123 (2), pp.81-104. ⟨10.1016/j.jet.2003.12.003⟩. ⟨halshs-00754070⟩

Share

Metrics

Record views

349