A Theory of Deception

Ettinger, David; Jehiel, Philippe

doi:10.1257/mic.2.1.1

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American Economic Journal: Microeconomics: Vol. 2 No. 1 (February 2010)

AEJ: Micro Volume. 2, Issue 1 | left

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A Theory of Deception

Article Citation

Ettinger, David, and Philippe Jehiel. 2010. "A Theory of Deception." American Economic Journal: Microeconomics, 2(1): 1-20.

DOI: 10.1257/mic.2.1.1

Abstract

This paper proposes an equilibrium approach to belief manipulation and deception in which agents only have coarse knowledge of their opponent's strategy. Equilibrium requires the coarse knowledge available to agents to be correct, and the inferences and optimizations to be made on the basis of the simplest theories compatible with the available knowledge. The approach can be viewed as formalizing into a game theoretic setting a well documented bias in social psychology, the fundamental attribution error. It is applied to a bargaining problem, thereby revealing a deceptive tactic that is hard to explain in the full rationality paradigm. (JEL C78, D83, D84)

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Authors

Ettinger, David (U Cergy-Pontoise)
Jehiel, Philippe (Paris School of Economics and U College London)

JEL Classifications

C78: Bargaining Theory; Matching Theory
D83: Search; Learning; Information and Knowledge; Communication; Belief
D84: Expectations; Speculations

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