Multidimensional reasoning in games: Framework, equilibrium, and applications

Ayala Arad, Ariel Rubinstein

    Research output: Contribution to journalArticle

    Abstract

    We develop a framework for analyzing multidimensional reasoning in strategic interactions, which is motivated by two experimental findings: (i) in games with a large and complex strategy space, players tend to think in terms of strategy characteristics rather than the strategies themselves; (ii) in their strategic deliberation, players consider one characteristic at a time. A multidimensional equilibrium is a vector of characteristics representing a stable mode of behavior: a player does not wish to modify any one characteristic. The concept is applied to several economic interactions, where a vector of characteristics, rather than a distribution of strategies, is identified as stable.

    Original languageEnglish (US)
    Pages (from-to)285-318
    Number of pages34
    JournalAmerican Economic Journal: Microeconomics
    Volume11
    Issue number3
    DOIs
    StatePublished - Jan 1 2018

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    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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