Correlated Equilibrium in Games with Incomplete Information
Yale University - Cowles Foundation - Department of Economics
Princeton University - Department of Economics
October 10, 2011
Cowles Foundation Discussion Paper No. 1822
Economic Theory Center Working Paper No. 024-2011
We define a notion of correlated equilibrium for games with incomplete information in a general setting with finite players, finite actions, and finite states, which we call Bayes correlated equilibrium. The set of Bayes correlated equilibria of a fixed incomplete information game equals the set of probability distributions over actions, states and types that might arise in any Bayes Nash equilibrium where players observed additional information. We show that more information always shrinks the set of Bayes correlated equilibria.
Number of Pages in PDF File: 62
Keywords: Correlated equilibrium, Incomplete information, Robust predictions, Information structure
JEL Classification: C72, D82, D83working papers series
Date posted: October 10, 2011
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