  We study interactions with uncertainty about demand sensitivity. In our
solution concept (1) firms choose seemingly-optimal strategies given the level
of sophistication of their data analytics, and (2) the levels of sophistication
form best responses to one another. Under the ensuing equilibrium firms
underestimate price elasticities and overestimate advertising effectiveness, as
observed empirically. The misestimates cause firms to set prices too high and
to over-advertise. In games with strategic complements (substitutes), profits
Pareto dominate (are dominated by) those of the Nash equilibrium. Applying the
model to team production games explains the prevalence of overconfidence among
entrepreneurs and salespeople.
