Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/331377 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 2025:7
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract: 
We develop a framework for categorization in games, applicable both to multistage games of complete information and static games of incomplete information. Players use categories to form coarse beliefs about their opponents' behavior. Players best-respond given these beliefs, as in analogy-based expectations equilibria. Categories are related to strategies via the requirements that categories contain a sufficient amount of observations and exhibit sufficient within-category similarity, in line with the bias-variance trade-off. We apply our framework to classic games including the chainstore game and adverse selection games, thereby suggesting novel predictions for these applications.
Subjects: 
Bounded rationality
Categorization
Bias-variance trade-off
Adverse selection
Chainstore paradox
JEL: 
C70
C73
D82
D83
D91
Document Type: 
Working Paper

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