Abstract
We study the behavioral implications of Rationality and Common Strong Belief in Rationality (RCSBR) with contextual assumptions allowing players to entertain misaligned beliefs, i.e., players can hold beliefs concerning their opponents' beliefs where there is no opponent holding those very beliefs. Taking the analysts' perspective, we distinguish the infinite hierarchies of beliefs actually held by players ("real types") from those that are a byproduct of players' hierarchies ("imaginary types") by introducing the notion of separating type structure. We characterize the behavioral implications of RCSBR for the real types across all separating type structures via a family of subsets of Full Strong Best-Reply Sets of Battigalli & Friedenberg (2012). By allowing misalignment, in dynamic games we can obtain behavioral predictions inconsistent with RCSBR (in the standard framework), contrary to the case of belief-based analyses for static games--a difference due to the dichotomy "non-monotonic vs. monotonic" reasoning.
| Original language | English |
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| DOIs | |
| Publication status | E-pub ahead of print - 1 May 2022 |
Keywords / Materials (for Non-textual outputs)
- infinite hierarchies of beliefs
- contextual assumptions
- non-belief-closed state spaces
- separating epistemic type structures
- real & imaginary types (player-specific)
- misaligned full strong best-reply sets