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Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - The Benefits of Coarse Preferences
AU - Halpern, Joseph Y.
AU - Heller, Yuval
AU - Winter, Eyal
PY - 2025/1/31
Y1 - 2025/1/31
N2 - We study the strategic benefits of coarsening one’s utility by clustering payoffs together. Our solution concept, coarse-utility equilibrium (CUE) requires that (1) each player maximizes her coarse utility, given the opponent’s strategy, and (2) the classifications form best replies to one another. We characterize CUEs in various games. In particular, we show that there is a qualitative difference between CUEs in which only one of the players clusters payoffs and those in which all players cluster their payoffs, and that, in the latter type of CUE, players treat other players better than they do in Nash equilibria in games with monotone externalities.
AB - We study the strategic benefits of coarsening one’s utility by clustering payoffs together. Our solution concept, coarse-utility equilibrium (CUE) requires that (1) each player maximizes her coarse utility, given the opponent’s strategy, and (2) the classifications form best replies to one another. We characterize CUEs in various games. In particular, we show that there is a qualitative difference between CUEs in which only one of the players clusters payoffs and those in which all players cluster their payoffs, and that, in the latter type of CUE, players treat other players better than they do in Nash equilibria in games with monotone externalities.
U2 - 10.1016/j.jebo.2024.106844
DO - 10.1016/j.jebo.2024.106844
M3 - Journal article
VL - 229
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
SN - 0167-2681
M1 - 106844
ER -