Bridging Level-K to Nash Equilibrium

Journal Article

We introduce NLK, a model that connects the Nash equilibrium (NE) and Level-K. It allows a player in a game to believe that her opponent may be either less or as sophisticated as, she is, a view supported in psychology. We apply NLK to data from five published papers on static, dynamic, and auction games. NLK provides different predictions than those of the NE and Level-K; moreover, a simple version of NLK explains the experimental data better in many cases, with the same or lower number of parameters. We discuss extensions to games with more than two players and heterogeneous beliefs.

Full Text

Duke Authors

Cited Authors

  • Levin, D; Zhang, L

Published In

Start / End Page

  • 1 - 44

Published By

Electronic International Standard Serial Number (EISSN)

  • 1530-9142

International Standard Serial Number (ISSN)

  • 0034-6535

Digital Object Identifier (DOI)

  • 10.1162/rest_a_00990

Language

  • en