Behavioral Players in a Game

This paper points out issues with having behavioral players together with fully rational players in a game. One example of behavioral players is naive or sophisticated players; one can study higher-order beliefs when sophistication is the first-order belief, but the paper also considers alternative ways of modelling the type space and non-Bayesian updating. The paper shows that players must have heterogeneous priors and this type of heterogeneous priors cannot be justified by acquiring private information from the common prior. Furthermore, equilibrium definitions need to be modified for games with behavioral players.