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Games 2015, 6(4), 637-676; doi:10.3390/g6040637

Evidential Equilibria: Heuristics and Biases in Static Games of Complete Information

Department of Economics, University Road, University of Leicester, Leicester LE1 7RH, UK
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Academic Editors: Andrew M. Colman and Briony D. Pulford
Received: 6 August 2015 / Revised: 19 October 2015 / Accepted: 5 November 2015 / Published: 16 November 2015
(This article belongs to the Special Issue Psychological Aspects of Strategic Choice)
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Abstract

Standard equilibrium concepts in game theory find it difficult to explain the empirical evidence from a large number of static games, including the prisoners’ dilemma game, the hawk-dove game, voting games, public goods games and oligopoly games. Under uncertainty about what others will do in one-shot games, evidence suggests that people often use evidential reasoning (ER), i.e., they assign diagnostic significance to their own actions in forming beliefs about the actions of other like-minded players. This is best viewed as a heuristic or bias relative to the standard approach. We provide a formal theoretical framework that incorporates ER into static games by proposing evidential games and the relevant solution concept: evidential equilibrium (EE). We derive the relation between a Nash equilibrium and an EE. We illustrate these concepts in the context of the prisoners’ dilemma game. View Full-Text
Keywords: evidential reasoning; game theory; cognitive bias; prisoners’ dilemma game; oligopoly games; conservative heuristics; radical heuristics; decision making evidential reasoning; game theory; cognitive bias; prisoners’ dilemma game; oligopoly games; conservative heuristics; radical heuristics; decision making
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

al-Nowaihi, A.; Dhami, S. Evidential Equilibria: Heuristics and Biases in Static Games of Complete Information. Games 2015, 6, 637-676.

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