Structure of Games and Behavioral Rules in Beauty Contest and 2x2 Games

Abstract
The talk consists of three parts, showing the relationship between the game structure and behavioral rules in a class of Beauty Contest games and the class of 2x2 games with ordinal payoffs mainly for first-period behavior: 1. We show through systematic changes of the parameters in Beauty Contest (BC) games how behavior shifts towards or away from the Nash equilibrium, explained and predicted by level-k reasoning. 2. With a generalized BC formulation, we can recover different economic models of aggregative games as a general equilibrium model with sentiments, Cournot, New Keynesian models, auctions, Ultimatum Games, and 2x2 games, amongst others. This parsimony arises because the generalized BC game formulation provides the best-reply functions, the first-order conditions of these different models. 3. We show first results of classifying 2x2 games with ordinal payoffs through behavioral rules and actual behavior. This contrasts the classification by dominance structure and the number of Nash equilibria.

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