Working Papers by Meng-Jhang Fong
# | Title | Authors | Date | Length | Paper | Abstract | |
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1467 | A Note on Cursed Sequential Equilibrium and Sequential Cursed Equilibrium | Fong, Meng-Jhang Lin, Po-Hsuan Palfrey, Thomas R. | 04/11/2023 | 27 | SSWP_1467.pdf | In this short note, we compare the cursed sequential equilibrium (CSE) by Fong et al. (2023) and the sequential cursed equilibrium (SCE) by Cohen and Li (2023). We identify eight main differences between CSE and SCE with respect to the following features:
(1) the family of applicable games, (2) the number of free parameters, (3) the belief updating process, (4) the treatment of public histories, (5) effects in games of complete information, (6) violations of subgame perfection and sequential rationality, (7) re-labeling of actions, and (8) effects in one-stage simultaneous-move games. | |
1465 | Cursed Sequential Equilibrium | Fong, Meng-Jhang Lin, Po-Hsuan Palfrey, Thomas R. | 04/11/2023 | 61 | sswp1465_updated_041123.pdf | This paper develops a framework to extend the strategic form analysis of cursed equilibrium (CE) developed by Eyster and Rabin (2005) to multi-stage games. The approach uses behavioral strategies rather than normal form mixed strategies, and imposes sequential rationality. We define cursed sequential equilibrium (CSE) and compare it to sequential equilibrium and standard normal-form CE. We provide a general characterization of CSE and establish its properties. We apply CSE to five applications in economics and political science. These applications illustrate a wide range of differences between CSE and Bayesian Nash equilibrium or CE: in signaling games; games with preplay communication; reputation building; sequential voting; and the dirty faces game where higher order beliefs play a key role. A common theme in several of these applications is showing how and why CSE implies systematically different behavior than Bayesian Nash equilibrium in dynamic games of incomplete information with private values, while CE coincides with Bayesian Nash equilibrium for such games. |