Cursed equilibrium

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' types' mixed strategies.

The solution concept was first introduced by Erik Eyster and Matthew Rabin in 2005, and has since become a canonical behavioral solution concept for Bayesian games in behavioral economics.