Deception, lies and belief manipulation are key aspects of many economic and strategic interactions, including bargaining, industrial organization, military operations or poker …
For game theory, belief manipulation and deception are delicate to capture because traditional equilibrium approaches assume that players fully understand the strategy of their opponents. Therefore, the phenomenon of deception is represented with the ideas of playing mixed strategy in zero-sum interactions and of playing a pooling or semi-pooling equilibrium in signaling, communication or repeated games. Although fruitful, these approaches cannot capture the fact that players may be fooled. Along the equilibrium path, players’ beliefs are always consistent with actual behaviors. A new strand of literature suggests that agents may be actually fooled assuming that they are boundedly rational. We will introduce this literature (theoretical and experimental) and its links with the results in the standard rationality paradigm.