Categorization in Games: A Bias-Variance Perspective

Pré-publication, Document de travail: We develop a framework for categorization in games, applicable both to multistage games of complete information and static games of incomplete information. Players use categories to form coarse beliefs about their opponents' behavior. Players best-respond given these beliefs, as in analogy-based expectations equilibria. Categories are related to previously used strategies via the requirements that categories contain a sufficient amount of observations and exhibit sufficient withincategory similarity, in line with the bias-variance trade-off. When applied to classic games including the chainstore game and adverse selection games our framework yields less unintuitive predictions than those arising with standard solution concepts.

Auteur(s)

Philippe Jehiel, Erik Mohlin

Date de publication
  • 2023
Mots-clés JEL
C70 C73 D82 D83 D91
Mots-clés
  • Bounded rationality
  • Categorization
  • Bias-variance trade-off
  • Adverse selection
  • Chainstore paradox
Référence interne
  • PSE Working Papers n°2023-22
Version
  • 1