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Biased Belief Equilibrium

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Biased Belief Equilibrium. / Heller, Yuval ; Winter, Eyal.
In: American Economic Journal: Microeconomics, Vol. 12, No. 2, 01.05.2020, p. 1-40.

Research output: Contribution to Journal/MagazineJournal articlepeer-review

Harvard

Heller, Y & Winter, E 2020, 'Biased Belief Equilibrium', American Economic Journal: Microeconomics, vol. 12, no. 2, pp. 1-40. https://doi.org/10.1257/mic.20170400

APA

Heller, Y., & Winter, E. (2020). Biased Belief Equilibrium. American Economic Journal: Microeconomics, 12(2), 1-40. https://doi.org/10.1257/mic.20170400

Vancouver

Heller Y, Winter E. Biased Belief Equilibrium. American Economic Journal: Microeconomics. 2020 May 1;12(2):1-40. Epub 2019 Feb 23. doi: 10.1257/mic.20170400

Author

Heller, Yuval ; Winter, Eyal. / Biased Belief Equilibrium. In: American Economic Journal: Microeconomics. 2020 ; Vol. 12, No. 2. pp. 1-40.

Bibtex

@article{f9a7b5547a8f41bb8de5cbdd90fcdf94,
title = "Biased Belief Equilibrium",
abstract = "We investigate how distorted, yet structured, beliefs can persist in strategic situations. Specifically, we study two-player games in which each player is endowed with a biased-belief function that represents the discrepancy between a player{\textquoteright}s beliefs about the opponent's strategy and the actual strategy. Our equilibrium condition requires that: (1) each player choose a best-response strategy to his distorted belief about the opponent's strategy, and (2) the distortion functions form best responses to one another. We obtain sharp predictions and novel insights into the set of stable outcomes and their supporting stable biases in various classes of games.",
author = "Yuval Heller and Eyal Winter",
year = "2020",
month = may,
day = "1",
doi = "10.1257/mic.20170400",
language = "English",
volume = "12",
pages = "1--40",
journal = "American Economic Journal: Microeconomics",
issn = "1945-7669",
publisher = "American Economic Association",
number = "2",

}

RIS

TY - JOUR

T1 - Biased Belief Equilibrium

AU - Heller, Yuval

AU - Winter, Eyal

PY - 2020/5/1

Y1 - 2020/5/1

N2 - We investigate how distorted, yet structured, beliefs can persist in strategic situations. Specifically, we study two-player games in which each player is endowed with a biased-belief function that represents the discrepancy between a player’s beliefs about the opponent's strategy and the actual strategy. Our equilibrium condition requires that: (1) each player choose a best-response strategy to his distorted belief about the opponent's strategy, and (2) the distortion functions form best responses to one another. We obtain sharp predictions and novel insights into the set of stable outcomes and their supporting stable biases in various classes of games.

AB - We investigate how distorted, yet structured, beliefs can persist in strategic situations. Specifically, we study two-player games in which each player is endowed with a biased-belief function that represents the discrepancy between a player’s beliefs about the opponent's strategy and the actual strategy. Our equilibrium condition requires that: (1) each player choose a best-response strategy to his distorted belief about the opponent's strategy, and (2) the distortion functions form best responses to one another. We obtain sharp predictions and novel insights into the set of stable outcomes and their supporting stable biases in various classes of games.

U2 - 10.1257/mic.20170400

DO - 10.1257/mic.20170400

M3 - Journal article

VL - 12

SP - 1

EP - 40

JO - American Economic Journal: Microeconomics

JF - American Economic Journal: Microeconomics

SN - 1945-7669

IS - 2

ER -