Abstract

http://ssrn.com/abstract=490702
 
 

References (25)



 


 



Independence and Heterogeneity in Games of Incomplete Information


Robin A. Mason


University of Southampton - Division of Economics; Centre for Economic Policy Research (CEPR)

Akos Valentinyi


Cardiff Business School; Centre for Economic Policy Research (CEPR)

January 2004

CEPR Discussion Paper No. 4177

Abstract:     
This Paper provides a sufficient condition for the existence and uniqueness of equilibrium in monotone pure strategies, in games of incomplete information. First, we show that if each player's incremental ex post pay-off is uniformly increasing in its own action and type, and its type is sufficiently uninformative of the types of its opponents (independence), then its expected pay-off satisfies a strict single crossing property in its own action and type, for any strategy profile played by its opponents. This ensures that a player's best response to any strategy profile is a monotone pure strategy. Secondly, we show that if, in addition, there is sufficient heterogeneity of the conditional density of types, then the best response correspondence is a contraction mapping. This ensures equilibrium existence and uniqueness. Our approach allows us to establish these results in a wide range of applications, including cases where there are no existing existence results.

Number of Pages in PDF File: 50

Keywords: Incomplete information, heterogeneity, existence, unique pure strategy equilibrium

JEL Classification: C72, D82

working papers series


Date posted: January 20, 2004  

Suggested Citation

Mason, Robin A. and Valentinyi, Akos, Independence and Heterogeneity in Games of Incomplete Information (January 2004). CEPR Discussion Paper No. 4177. Available at SSRN: http://ssrn.com/abstract=490702

Contact Information

Robin Mason (Contact Author)
University of Southampton - Division of Economics ( email )
Southampton, SO17 1BJ
United Kingdom
+44 23 8059 3268 (Phone)
+44 23 8059 3858 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Akos Valentinyi
Cardiff Business School ( email )
Cardiff, CF10 3EU
United Kingdom
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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