Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167963
Authors: 
al-Nowaihi, Ali
Dhami, Sanjit
Year of Publication: 
2015
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 6 [Year:] 2015 [Issue:] 4 [Pages:] 637-676
Abstract: 
Standard equilibrium concepts in game theory find it difficult to explain the empirical evidence from a large number of static games, including the prisoner's dilemma game, the hawk-dove game, voting games, public goods games and oligopoly games. Under uncertainty about what others will do in one-shot games, evidence suggests that people often use evidential reasoning (ER), i.e., they assign diagnostic significance to their own actions in forming beliefs about the actions of other like-minded players. This is best viewed as a heuristic or bias relative to the standard approach. We provide a formal theoretical framework that incorporates ER into static games by proposing evidential games and the relevant solution concept: evidential equilibrium (EE). We derive the relation between a Nash equilibrium and an EE. We illustrate these concepts in the context of the prisoner's dilemma game.
Subjects: 
evidential reasoning
game theory
cognitive bias
prisoner's dilemma game
oligopoly games
conservative heuristics
radical heuristics
decision making
JEL: 
D3
C7
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
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