Ex-post regret heuristics under private values (II): 2×2 games

B-Tier
Journal: Journal of Mathematical Economics
Year: 2014
Volume: 54
Issue: C
Pages: 112-123

Authors (2)

Saran, Rene (not in RePEc) Serrano, Roberto (Brown University)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

When information is hardly available, the role of priors should be limited in robust game-theoretic predictions. We analyze a process of heuristics based on ex-post regret as a guide to understand how to play games of incomplete information with private values. While our dynamics has a strong component of inertia, its key is that with a small probability actions are modified in the direction of ex-post regrets. We apply stochastic stability to identify the strategies that will be used in the long run in 2×2 games (i.e., two players with two actions each). For a class of 2×2 games, which includes quasi-supermodular games satisfying “weak dominance”, the resulting theory predicts cautious behavior in the long run, as stochastically stable strategies are minimax regret equilibria. A minimax regret equilibrium is independent of the beliefs about the opponents’ types and actions (only the supports matter) and suggests a “safe way to play the game”.

Technical Details

RePEc Handle
repec:eee:mateco:v:54:y:2014:i:c:p:112-123
Journal Field
Theory
Author Count
2
Added to Database
2026-01-29