Bridging Level-K to Nash Equilibrium

33 Pages Posted: 18 Mar 2017 Last revised: 6 Apr 2020

See all articles by Dan Levin

Dan Levin

Ohio State University (OSU) - Economics

Luyao Zhang

Duke Kunshan University

Date Written: March 25, 2019


We propose a new solution concept, NLK, that connects Nash Equilibrium (NE) and Level-K. It allows a player in a game to believe that her opponent may be either less or as sophisticated as, she is a view with support in psychology. We apply it to data from four published papers on static, dynamic and auction games. NLK provides different predictions than those of NE and Level-K. Moreover, a simple version of it explains the experimental data better in many cases. We discuss extensions to games with more than two players and heterogeneous beliefs.

Keywords: Nash Equilibrium, Level-k, bounded rationality

JEL Classification: D01, C72, C92

Suggested Citation

Levin, Dan and Zhang, Luyao, Bridging Level-K to Nash Equilibrium (March 25, 2019). Available at SSRN: or

Dan Levin

Ohio State University (OSU) - Economics ( email )

1945 N. High Street
Columbus, OH 43210-1172
United States

Luyao Zhang (Contact Author)

Duke Kunshan University ( email )

No. 8 Duke Avenue
Kunshan, Jiangsu 215316


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