TY - JOUR

T1 - Simple Unawareness in Dynamic Psychological Games

AU - Nielsen, Carsten Søren

AU - Sebald, Alexander Christopher

PY - 2017/1

Y1 - 2017/1

N2 - Building on Battigalli and Dufwenberg (2009)’s framework of dynamic psychological games and the progress in the modeling of dynamic unawareness by Heifetz, Meier, and Schipper (2013a) we model and analyze the impact of asymmetric awareness in the strategic interaction of players motivated by reciprocity and guilt. Specifically we characterize extensive-form games with psychological payoffs and simple unawareness, define extensive-form rationalizability and, using this, show that unawareness has a pervasive impact on the strategic interaction of psychologically motivated players. Intuitively, unawareness influences players’ beliefs concerning, for example, the intentions and expectations of others which in turn impacts their behavior.

AB - Building on Battigalli and Dufwenberg (2009)’s framework of dynamic psychological games and the progress in the modeling of dynamic unawareness by Heifetz, Meier, and Schipper (2013a) we model and analyze the impact of asymmetric awareness in the strategic interaction of players motivated by reciprocity and guilt. Specifically we characterize extensive-form games with psychological payoffs and simple unawareness, define extensive-form rationalizability and, using this, show that unawareness has a pervasive impact on the strategic interaction of psychologically motivated players. Intuitively, unawareness influences players’ beliefs concerning, for example, the intentions and expectations of others which in turn impacts their behavior.

KW - Faculty of Social Sciences

KW - C72

KW - C73

KW - D80

KW - unawareness

KW - psychological payoffs

KW - extensive-form rationalizability

U2 - 10.1515/bejte-2015-0011

DO - 10.1515/bejte-2015-0011

M3 - Journal article

VL - 17

SP - 1

EP - 29

JO - The B.E. Journal of Theoretical Economics

JF - The B.E. Journal of Theoretical Economics

SN - 2194-6124

IS - 1

ER -