Abstract
AbstractTwo individuals are involved in a conflict situation in which preferences are ex ante uncertain. Although they eventually learn their own preferences, they have to pay a small cost if they want to secretly learn their opponent's preferences. We show that there is an interval with an upper bound less than 1 and lower bound greater than zero such that, for sufficiently small positive costs of information acquisition, in any Bayesian Nash equilibrium of the resulting game of incomplete information the probability of acquiring information about the opponent's preferences is within this interval.
Highlights
It is probably rare in a conflict situation that we know the exact cardinal preferences of our opponent.1 Consider, for instance, a penalty kick in soccer
When we focus on conflict games alone, we find a starkly contrasting result in that any Bayesian Nash equilibrium must exhibit “partial” cognitive empathy, i.e. the probability of acquiring empathy is bounded from below as well as from above, even when costs of acquiring empathy tend to zero
We first show that for positive costs of empathy acquisition there cannot be an equilibrium of a conflict game in which both players choose to acquire empathy with probability one
Summary
It is probably rare in a conflict situation that we know the exact cardinal preferences of our opponent. Consider, for instance, a penalty kick in soccer. The question we are interested in in this paper is whether or not the other player, the kicker, would, at some small cost, like to find out about this slight injury and its consequences for her opponent’s preferences. This cost can be in terms of effort or even money going into the actual acquisition or purchase of this piece of information. Along the lines as suggested above, is such that players are highly rational but have some small costs of reasoning about their respective opponent’s preferences This model could be about the two individuals engaged. Our results imply that nature (guiding play to Bayesian Nash equilibrium) endows some but not all of her subjects with cognitive empathy even if the costs of doing so are essentially zero
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