Hedges, Jules Oliva, Paulo Winschel, Evguenia Winschel, Viktor Zahn, Philipp
Year of Publication:
Working Paper Series 14-13
We use quantifiers and selection functions to represent simultaneous move games. Quantifiers and selection functions are examples of higher-order functions. A higher order function is a function whose domain is itself a set of functions. Thus, quantifiers and selection func- tions allow players to form goals not only about outcomes but about the whole (or parts) of the game play. They encompass standard pref- erences and utility functions as special cases, but also extend to non-maximizing behavior and context-dependent motives. We adapt the Nash equilibrium concept to our new representation and also introduce a refinement to capture the essential features of context-dependent motives. As an example, we discuss fixpoint operations as context dependent goals of coordination and differentiation in simultaneous game variants of Keyne's beauty contest and the minority game.
context dependent refinement of Nash equilibrium higher order functions quantifiers selection functions beauty contest minority game endogenous economist