Behavioral Equilibrium in Economies with Adverse Selection

Abstract

I propose a new solution concept–behavioral equilibrium–to study environments with players who are naive, in the sense that they fail to account for the informational content of other players’actions. A behavioral equilibrium requires that: (i) players have no incentives to deviate given their beliefs about the consequences of deviating; (ii) these beliefs… (More)

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@inproceedings{Esponday2005BehavioralEI, title={Behavioral Equilibrium in Economies with Adverse Selection}, author={Ignacio Esponday and Lu{\'i}s Cabral and Vincent Crawford and Willie Fuchs and William Greene and Yuan-Chuan Lien}, year={2005} }