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Psychological game theory and Bayesian rationality (Psychological Games)
Start date: Aug 1, 2009, End date: Jul 31, 2011 PROJECT  FINISHED 

The main objective of this project is to study the epistemic conditions for equilibria in psychological games. This is a natural way to go, since a psychological game incorporates beliefs into the individual’s payoff function. The epistemic analysis in the literature is divided in two big branches: the type space approach introduced by Harsanyi (1967)-68 and the Bayesian state space approach introduced by Aumann (1976). The theory in psychological games employs tools only from the first approach. Our main purpose is to extensively study the Bayesian foundations of psychological games. This would give us insights for rationalizability (Brandenburger and Dekel, 1987) and correlated equilibria (Aumann, 1987), which are crucial solution concepts for strategic form games. In addition, this approach would allow us to contribute to the theory of extensive form psychological games under the assumption that players update their beliefs during the course of the game (Battigalli and Dufwenberg, 2007).
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