Cognitive Empathy in Conflict Situations

Abstract

Two individuals are involved in a conflict situation in which preferences are ex ante uncertain. While they eventually learn their own preferences, they have to pay a small cost if they want to learn their opponent's preferences. We show that, for sufficiently small positive costs of information acquisition, in any Bayesian Nash equilibrium of the resulting game of incomplete information the probability of getting informed about the opponent's preferences is bounded away from zero and one.Keywords: Incomplete Information, Information Acquisition, Theory of Mind, Conflict, Imperfect Empathy JEL Codes: C72, C73, D03, D74, D82, D83 * We thank seminar participants at the Universities of Bielefeld, Graz, and Oxford, and at the CERGE-EI in Prague for useful comments and suggestions.

Cognitive Skills, Strategic Sophistication, and Life Outcomes

“…Initial work in this direction studies the evolution of the ability to understand others' preferences(Robalino and Robson, 2016), whileGauer and Kuzmics (2017) andKimbrough et al (2017) study learning about others' preferences in games.…”