Cursed Equilibrium

@inproceedings{Eyster2000CursedE,
  title={Cursed Equilibrium},
  author={Erik Eyster and Matthew Rabin},
  year={2000}
}
There is evidence that people do not fully take into account how other people’s actions are contingent on these others’ information. This paper deÞnes and applies a new equilibrium concept in games with private information, cursed equilibrium, which assumes that each player correctly predicts the distribution of other players’ actions, but underestimates the degree to which these actions are correlated with these other players’ information. We apply the concept to common-values auctions, where… CONTINUE READING
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References

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