Gabriel Ziegler (University of Edinburgh) will present “Bounded Reasoning and Rationalizability” on April 4th, 2025, at 10:30 AM, in room QA405.
Abstract:
We examine the connections between bounded reasoning approaches in game theory—such as level-k and cognitive hierarchy models—using tools from epistemic game theory. We demonstrate that these classic models are subsumed by an overarching ∆-rationalizability framework, in which the ∆ restriction transparently constrains the first-order beliefs of bounded types only, thereby clarifying how agents reason. Our formalization retains the standard behavioral predictions of level-k and cognitive hierarchy models, while avoiding reliance on an exogenous bound on iterative reasoning. By substituting arbitrary iterative assumptions with precise belief restrictions, we provide a unified and transparent foundation for analyzing bounded rationality. These insights extend in a much more delicate way to dynamic settings, where we further explore a novel role of epistemic priority in such contexts.
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