Interdependent Preferences and Strategic Distinguishability
Yale University - Cowles Foundation - Department of Economics
Princeton University - Department of Economics
National University of Singapore (NUS) - Department of Economics
February 28, 2011
Economic Theory Center Working Paper No. 008-2011
A universal type space of interdependent expected utility preference types is constructed from higher-order preference hierarchies describing (i) an agent's (unconditional) preferences over a lottery space; (ii) the agent's preference over Anscombe-Aumann acts conditional on the unconditional preferences; and so on.
Two types are said to be strategically indistinguishable if they have an equilibrium action in common in any mechanism that they play. We show that two types are strategically indistinguishable if and only if they have the same preference hierarchy. We examine how this result extends to alternative solution concepts and strategic relations between types.
Number of Pages in PDF File: 43
Keywords: Interdependent Preferences, Higher-Order Preference Hierarchy, Universal Type Space, Strategic Distinguishability
JEL Classification: C79, D82, D83working papers series
Date posted: December 22, 2010 ; Last revised: March 19, 2011
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