Mixed Strategy Equilibrium Is Tricky

This reminds me of the following two papers:

1. Crawford, V. P. (2003). Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions. The American Economic Review, 93(1), 133–149. doi:10.2307/3132165

Here deception can work with non-equilibrium K-Level thinkers, and foil people who think one level too far.

2. Foster, D. P., & Young, H. P. (2001). On the impossibility of predicting the behavior of rational agents. Proceedings of the National Academy of Sciences, 98(22), 12848–12853. doi:10.1073/pnas.211534898

Agents in a rock paper scissors game without knowledge of each other’s payoffs eventually form far from equilibrium conjectures about what the other will do.