Bayesian Games with Rationally Inattentive Players

IF 0.4 Q4 ECONOMICS Journal of Interdisciplinary Economics Pub Date : 2022-05-16 DOI:10.1177/02601079221083491
Rongyu Wang
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Abstract

We study how scarcity of attention affects strategic choice behaviour in a 2-player incomplete information entry game. Scarcity of attention is a common psychological character among population (Kahnemann, 1973, Attention and effort, Prentice Hall), and it is modelled by the rational inattention approach introduced by Sims (1998, Carnegie-Rochester Conference Series on Public Policy, 49, 317–356). In this game, players acquire information about their private payoff shocks at a cost, which follows a high-low binary distribution. We find that high information cost can generate multiple equilibria, and the number of equilibria differs with respect to different ranges of information cost. The number of equilibria could be 1, 5 or 3. Increasing the information cost could encourage or discourage a player to choose entry in some equilibria. This depends on whether the prior probability of high payoff shocks is greater than a given threshold value. We also exhibit a necessary and sufficient condition of parameter specification such that with the same set of parameters satisfying this condition, both the rational inattention Bayesian game and a Bayesian quantal response equilibrium game where the observation errors are additive and follow a Type-I extreme value distribution can have a common equilibrium. JEL: C72, D91
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具有理性不专注玩家的贝叶斯游戏
我们研究了注意力稀缺如何影响两层不完全信息输入游戏中的战略选择行为。注意力缺乏是人群中常见的心理特征(Kahnemann,1973,注意力与努力,Prentice Hall),它是由Sims引入的理性注意力不集中方法建模的(1998,卡内基-罗切斯特公共政策系列会议,49117-356)。在这个游戏中,玩家以一定的成本获得关于他们的私人回报冲击的信息,这遵循高低二进制分布。我们发现,高信息成本可以产生多重均衡,并且均衡的数量随着信息成本的不同范围而不同。平衡的数量可以是1、5或3。增加信息成本可能会鼓励或阻碍参与者在某些均衡中选择进入。这取决于高回报冲击的先验概率是否大于给定的阈值。我们还展示了参数规范的一个充要条件,使得在相同的参数集满足该条件的情况下,理性疏忽贝叶斯博弈和贝叶斯量子响应均衡博弈都可以具有共同的均衡,其中观察误差是加性的并且遵循I型极值分布。JEL:C72,D91
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来源期刊
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1.40
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发文量
14
期刊介绍: The explosion of information and research that has taken place in recent years has had a profound effect upon a variety of existing academic disciplines giving rise to the dissolution of barriers between some, mergers between others, and the creation of entirely new fields of enquiry.
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