Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296391 
Year of Publication: 
2022
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 17 [Issue:] 4 [Year:] 2022 [Pages:] 1501-1527
Publisher: 
The Econometric Society, New Haven, CT
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 evolve over time.
Subjects: 
Bounded rationality
evolution
level k thinking
JEL: 
C73
D81
D90
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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