Abstract
Humans differ in their strategic reasoning abilities and in beliefs about others' strategic reasoning abilities. Studying such cognitive hierarchies has produced new insights regarding equilibrium analysis in economics. This paper investigates the effect of cognitive hierarchies on long run behavior. Despite short run behavior being highly sensitive to variation in strategic reasoning abilities, this variation is not replicated in the long run. In particular, when generalized risk dominant strategy profiles exist, they emerge in the long run independently of the strategic reasoning abilities of players. These abilities may be arbitrarily low or high, heterogeneous across players, and evolving over time.
| Item Type: | Journal Article, refereed, original work |
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| Communities & Collections: | 06 Faculty of Arts > Institute of Sociology |
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| Dewey Decimal Classification: | 150 Psychology |
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| Scopus Subject Areas: | Social Sciences & Humanities > General Economics, Econometrics and Finance |
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| Uncontrolled Keywords: | General Economics, Econometrics and Finance |
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| Language: | English |
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| Date: | 1 January 2022 |
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| Deposited On: | 23 Dec 2022 10:26 |
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| Last Modified: | 26 Apr 2025 01:40 |
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| Publisher: | Society for Economic Theory |
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| ISSN: | 1555-7561 |
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| OA Status: | Gold |
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| Free access at: | Publisher DOI. An embargo period may apply. |
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| Publisher DOI: | https://doi.org/10.3982/te4824 |
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| Project Information: | - Funder: Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung
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- Funder: Japan Society for the Promotion of Science
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Nax, Heinrich H