Inclusive cognitive hierarchy

Cognitive hierarchy theory, a collection of structural models non-equilibrium thinking, in which players’ best responses rely on heterogeneous beliefs others’ strategies including naïve behavior, proved powerful explaining observations from wide range games. We propose an inclusive cognitive model, players do not rule out the possibility facing opponents at their own thinking level. Our theoretical results show that inclusiveness is crucial for asymptotic properties deviations equilibrium behavior expansive limiting behaviors are categorized three distinct types: naïve, Savage rational with inconsistent beliefs, and sophisticated. test model laboratory experiment collective decision-making. The data suggests indispensable regard to explanatory power hierarchical thinking.