Biased-Belief Equilibrium

摘要

Decision makers' preferences and beliefs may intermingle. In strategic environments distorted beliefs can take the form of a self-serving commitment device. Our paper introduces a formal model for the persistence of such beliefs and proposes an equilibrium concept that supports them. Our analysis characterizes BBE in a variety of strategic environments, such as games with strategic complements and games with strategic substitutes. In particular, we show that agents present wishful thinking in all BBE in both of these common environments.