| Cursed equilibrium | |
|---|---|
| Solution concept in game theory | |
| Relationship | |
| Superset of | Bayesian Nash equilibrium |
| Significance | |
| Proposed by | Erik Eyster, Matthew Rabin |
In game theory, a cursed equilibrium is a solution concept for static games of incomplete information. It is a generalization of the usual Bayesian Nash equilibrium, allowing for players to underestimate the connection between other players' equilibrium actions and their types – that is, the behavioral bias of neglecting the link between what others know and what others do. Intuitively, in a cursed equilibrium players "average away" the information regarding other players mixed strategies.
The solution concept was first introduced by Erik Eyster and Matthew Rabin in 2005,[1] and has since become a canonical behavioral solution concept for Bayesian games in behavioral economics.[2]